Phillips 66 Sells Specialty Chemical Unit

Tuesday, January 7, 2014 @ 04:01 PM gHale

Berkshire Hathaway Inc. will pay $1.4 billion for a Phillips 66 business unit that makes chemicals to improve the flow potential of pipelines.

Phillips 66 said Monday Berkshire will pay for the unit, Phillips Specialty Products Inc, using about 19 million shares of Phillips 66 stock that it currently owns.

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“I have long been impressed by the strength of the Phillips 66 business portfolio,” said Berkshire Hathaway’s Warren Buffett. “The flow improver business is a high-quality business with consistently strong financial performance.”

The exact number of shares Berkshire will pay for the unit will depend on their price on the closing date, the companies said.

James Hambrick, chief executive of Berkshire’s specialty chemicals unit Lubrizol Corp., will oversee the business, Buffett said. Berkshire bought Lubrizol for $9 billion in 2011.

Phillips 66 Chief Executive Greg Garland said the company decided to sell the business because Berkshire Hathaway made a strong offer. He said the company will now focus its growth on its oil and natural gas transportation and processing business, as well as its other chemicals businesses.

Phillips 66 said it expects the Phillips Specialty Products unit to have about $450 million of cash and cash equivalents on its balance sheet at closing. It expects the deal to close in the first half of this year.

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