Financial Times: Consortium to bid for Shell unit: “The sale of the LPG unit is part of a $10bn-$12bn (£5.5bn-£6.7bn) asset disposal programme implemented by Shell in the wake of its reserves overbooking scandal.” (ShellNews.net)
By Lina Saigol and James Boxell
Published: October 12 2004
Goldman Sachs Capital Partners has teamed up with Kohlberg, Kravis Roberts, the US private equity firm, to bid for Royal Dutch/Shell's liquefied petroleum gas business, which is valued at more than £1bn.
Shell has mandated Citigroup to sell the LPG business and is expected to send an information memorandum on the business to prospective buyers in January.
The sale of the LPG unit is part of a $10bn-$12bn (£5.5bn-£6.7bn) asset disposal programme implemented by Shell in the wake of its reserves overbooking scandal. The company is selling underperforming and non-core operations to help it finance $45bn of capital spending over the next three years as it tries to revitalise its stagnant exploration and production business.
The LPG sale is the latest Shell mandate won by Citigroup. The bank is working, along with NM Rothschild, on the creation of a corporate structure for the Anglo-Dutch oil group.
Citigroup is also advising on the possible multi-billion-dollar disposal of Intergen, the power generation business 68 per cent owned by Shell. The Goldman Sachs/KKR consortium is expected to be an early bidder when the LPG auction kicks off. The auction is likely to attract other equity partners.
JPMorgan Partners, which teamed up last year with Candover and 3i, the UK-based buy-out firms, to buy the upstream part of ABB's oil, gas and petrochemicals division, will also consider bidding for the arm.
PAI Partners, the French buyout group, is also expected to take a look, given its experience in the sector when it bought a stake in Antargaz, the leading LPG distributor in France. Blackstone Group and Cinven, two other buy-out houses, are also likely to ask to see the sales memorandum. Shell's LPG unit is suited to a leveraged buy-out because of its stable cash flows.
People familiar with the situation said the assets would be less attractive for a strategic buyer because of antitrust issues. However, any interested trade buyer could team up with one of the financial bidders.
Last month, Shell said it had already been approached by a bidder for the LPG business, but did not disclose its identity. It declined to comment yesterday on the sale process.
As well as disposals in its downstream business, Shell also plans $5bn of asset sales in exploration and production over the next three years. Recent sales include all of its oilfields in Bangladesh and Thailand.
So far this year, it has sold twice the assets earmarked in 2003 for disposal in 2004.
Credit Suisse First Boston and Lazard have been retained to help assess options for Shell's $6bn Basell plastics joint venture with BASF, including a sale or initial public offering.