Glencore to buy Chevron’s S African, Botswanaian assets for $973 mn

Commodities trading and mining giant Glencore plc yesterday struck a deal to buy Chevron's South African and Botswana assets for a combined $973 million.

Under the deal, Glencore will buy Chevron's 75 per cent stake in its South African subsidiary and its Botswana interests.

The remaining 25 per cent stake will continue to be held by a consortium that includes Black Economic Empowerment shareholders and an employee trust.

The assets include a 100,000 barrel-per-day oil refinery in Cape Town, a lubricants plant in Durban as well as 820 petrol stations and other oil storage facilities. It also includes 220 convenience stores across South Africa and Botswana.

The combined business made $138 million in pre-tax profits last year.

The Switzerland-based company intends to fund the acquisition through cash reserves and is expected to close in mid-2018.

Chevron had kicked off the sale of its South African and Botswana assets in early 2016 due to weak oil prices.

In March, Chevron agreed to sell these assets to China's Sinopec for nearly $1 billion, but the deal went under extended review by South Africa's Economic Development ministry and local shareholders exercised pre-emption rights following delays to the Sinopec deal (See: Sinopec to buy 75% in Chevron's South Africa and Botswana assets for nearly $1 bn).

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.

Glencore believes that the assets provide an attractive downstream opportunity for its oil business. The acquisition will include undertakings as to retention of the local management team and workforce.

The transaction is conditional on the receipt of all necessary regulatory approvals.