Sunoco to sell chemicals unit for $350M
PHILADELPHIA - February 1, 2010 -- The petroleum refiner Sunoco Inc. said Monday it will sell its chemical unit to Brazil's Braskem SA for about $350 million in cash.
The move is part of Sunoco's efforts to shed noncore assets, improve returns on invested capital and funnel sale proceeds to more strategic parts of the business.
The deal fits the petrochemical company Braskem's international expansion strategy.
Sunoco is selling its subsidiary Sunoco Chemicals Inc., based in Philadelphia and comprised of its polypropylene business, which makes plastics used in a variety of applications, including food containers, bike helmets and auto parts.
The sale includes manufacturing facilities in La Porte, Texas; Marcus Hook, Pa., and Neal, W.Va. Altogether these plants have the combined capacity to make about 2.1 billion pounds of polypropylene annually, or about 13 percent of installed U.S. polypropylene production capacity.
The sale also includes Sunoco's research and technology center in Pittsburgh.
The deal should close by the end of March. Sunoco expects it to result in a pretax loss in the first quarter of about $185 million to $195 million.
Meanwhile, Sunoco said it has permanently shut down its previously idled Eagle Point refinery in Westville, N.J., due to continued weak demand for refined products and tough market conditions. The refinery was idled in early November 2009.
Still, the company said refined product storage and handling operations there will continue. Sunoco is exploring a number of options for using the site in the future, including as a potential center for biofuels production.
Sunoco said the shutdown is not expected to have a material financial impact beyond what was recorded in 2009.
Employees furloughed after the refinery was idled are eligible for a severance program that includes job placement assistance and retraining, as well as a continuation of medical benefits for the length of the severance, Sunoco said.
Shares of Sunoco rose 83 cents, or 3.3 percent, to $25.92 in morning trading Monday. Braskem's U.S. shares rose 43 cents, or 3.1 percent, to $14.34.
pennsylvania, philadelphia, sunoco, business/finance
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