JOHANNESBURG (miningweekly.com) – JSE-listed Glencore has entered into an agreement with Off The Shelf Investments Fifty Six (OTS) to acquire a 75% interest in Chevron South Africa, as well as a 100% interest in Chevron Botswana, for an aggregate consideration of $973-million.
The assets comprise the interests of the Chevron group in its manufacturing, retail and industrial supply business in South Africa and Botswana.
“Glencore believes the assets provide an attractive downstream opportunity for its oil business. The acquisition will include undertakings to retain the local management team and workforce,” the company said in a statement.
The consideration will be payable in cash on closing and will be funded from Glencore's own cash resources.
Glencore intends to manage its overall oil asset portfolio to ensure that, including this transaction, net additional capital investment is limited to less than $500-million over the next 12 months, consistent with the group’s conservative financial framework targets.
Chevron in 2016 announced plans to sell its stake in Chevron South Africa, which operates a 110 000 bl/d refinery in Cape Town.
It agreed, in March 2017, to sell its stake in the South African and Botswana assets to China’s Sinopec for nearly $1-billion.
However, OTS has since exercised its pre-emptive right to acquire the assets from Chevron. Glencore will support OTS as technical and financial partner during the acquisition process.
The remaining 25% interest in Chevron South Africa is held by an empowerment partner.