Nova Chemicals to acquire Geismar olefins facility in US Gulf Coast for $2.1bn

Nova Chemicals has agreed to acquire Williams Partners’ 88.46% ownership interest in the olefins plant in Geismar, Louisiana, US, along with approximately 525 acres of undeveloped land adjacent to the plant and Williams’ interest in the ethylene trading hub in Mt. Belvieu in Texas.

According to the membership interest purchase agreement, Nova Chemicals will pay $2.1bn as consideration for this acquisition, subject to working capital adjustments.

After the closing of this transaction, both companies have agreed to sign a long-term arrangement under which Williams will transport and supply ethane feedstock to support the plant.

Nova Chemicals president and CEO Todd Karran said: “This transaction provides us with the opportunity to acquire an operating facility with immediate, positive cash flow, and with access to new customers and the benefits of an experienced workforce.

"This is a clear indication of their commitment to the growth of our business and to these value-adding investments in the Americas.”

“A key component of our growth strategy is to expand to the US Gulf Coast and leverage next generation technology to better serve our customers in the Americas.

“The business allows us to diversify our geographic footprint benefiting from access to significant US shale gas reserves and well established petrochemical and supply chain infrastructure.”

Located in the US Gulf Coast, yhe olefins plant annually produces nearly 1.95 billion pounds of ethylene.

One of the largest refining and petrochemical production hub in North America, the plant also offers riverfront access.

Karran added: “Coupled with our recent announcement regarding our plans to form a joint venture with Borealis and Total in Texas, we have taken steps to firmly establish our presence on the US Gulf Coast.

“We are appreciative for the support of our board of directors and owner. This is a clear indication of their commitment to the growth of our business and to these value-adding investments in the Americas.”

Nova also claimed that it will offer jobs to all employees of Geismar plant, along with sales and marketing personnel operating from Williams’ Houston office.

Subject to customary regulatory approvals and other conditions, the transaction is expected to close in later this year.

In this transaction, HSBC Securities (USA) acted as exclusive financial advisor while Orrick, Herrington & Sutcliffe and Liskow & Lewis provided legal assistance to Nova Chemicals.

Nova Chemicals manufactures everyday chemicals and plastic resins.

Headquartered in Alberta, Canada, the company is a fully owned subsidiary of the International Petroleum Investment Company.

Image: Nova Chemicals Joffre, Alberta Plant. Photo: courtesy of Nova Chemicals.