SK bids for Beijing Tongyi business

SK Lubricants, which is part of South Korea’s SK Group, is reportedly taking part in the first round of bidding to acquire Shell’s stake in Beijing Tongyi, which was placed on the sale block recently. Shell acquired 75% of Beijing Tongyi Petroleum Chemical Co., which was at that time one of the largest privately owned lubricant manufacturer in China, for an undisclosed amount in 2006.

Acquiring a majority stake in Beijing Tongyi could make the buyer a major player in the world’s largest lubricant market.

Shell has hired China International Capital Corp. to sell its stake. The sale was expected to fetch USD 500 million, but according to recent reports, the figure is now closer to USD 620 million due to heightened interests in the sale. Private equity firm Blackstone Group is also reportedly interested in the stake.

Shell Chief Executive Ben van Beurden, who took over in January, is looking to raise cash and boost returns amid declining crude oil prices. He has laid out plans to sell USD 15 billion of assets by the end of 2015.

Shell is now the largest international lubricant supplier in China. After the sale, it will continue to have substantial operations in China.