2022.08.13
On 28 July 2022, INEOS ("INEOS") and China Petroleum & Chemical Corporation ("Sinopec"; Stock Code: 600028.SH, 00386.HK) entered into a series of acquisition and joint venture cooperation agreements with respect to three major transactions. The three landmark transactions, valued at approximately USD 7 billion in total, are expected to achieve a combined annual production capacity of 7 million tonnes and generate annual sales of approximately USD 10 billion.
The three transactions entered into by INEOS and Sinopec are as follows:
1. INEOS acquired 50% of Shanghai SECCO Petrochemical Company Limited ("Shanghai SECCO"), a subsidiary of Sinopec, for a consideration equal to or more than approximately RMB 10.5 billion. Shanghai SECCO was established in October 2001 and the former Shanghai SECCO was funded and established by Sinopec, Sinopec Shanghai Petrochemical Company Limited, a subsidiary of Sinopec, and BP Chemicals East China Investment Company Limited (which was later taken over by Sinopec Shanghai Gaoqiao Petrochemical Company Limited, a subsidiary of Sinopec). This was one of the largest Sino-foreign joint venture petrochemical projects in China with a total investment of over USD 3 billion.
2. Sinopec acquired 50% equity interest in INEOS Benling High-Tech Materials (Ningbo) Limited ("INEOS High-Tech Materials"), a subsidiary of INEOS. INEOS Hi-Tech Materials, incorporated in Ningbo in August 2019, is principally engaged in the research, production, development, design, wholesale, import and export and after-sales services of or for general and special ABS synthetic resins or petroleum resins. It is the first world-class ABS production base funded and established by INEOS in China; and
3. INEOS and Sinopec established a 50:50 joint venture company for a high-density polyethylene (HDPE) project, which will have an annual production capacity of 500,000 tonnes upon completion of the HDPE project to be built in Tianjin.
INEOS is a global manufacturer of petrochemicals, specialty chemicals and petroleum products, with 194 plants and operations in 29 countries worldwide. It operates 36 separate business units covering the chemical, oil and gas industries, as well as several consumer brands. INEOS products are used in a wide range of industries including transportation, packaging, communications and electronics, textiles, paints and coatings, medical, household products and energy. The three deals entered into with Sinopec are milestones for INEOS. Sir Jim Ratcliffe, Chairman and CEO of INEOS Group noted that “this cooperation will reshape INEOS' production and technology footprint in the petrochemical industry in China and is of great significance to INEOS.”
As the domestic legal advisor to INEOS for this transaction, JunHe was involved in the entire process of due diligence investigation, the validation of the transaction proposal, the resolution of legal issues involved in the transaction, the review of the transaction text and assisting in the management of the transaction process. With a consistently rigorous and efficient work style and professional and meticulous work attitude, JunHe assisted the client to successfully complete the signing of the transaction documents and won the client's full recognition and trust. The JunHe team once again demonstrated their ability to provide excellent legal services for large and complex cross-border M&A transactions.
The lead partner of this project was CHEN, Wei, and the host partners were CHEN, Wei and SUN, Yi (Cliff). Partners Janet Hui, GONG, Mingfang, Shen, Nan, LU, Juyi, ZHAO, Jikui and ZHANG, Qing (Atlas) all provided valuable support for the project.
