Glencore said Friday it will buy 75% of Chevron’s South African and Botswanan business from minority black investors who exercised a pre-emptive right. The assets include a 100,000 barrel-a-day refinery in
Chevron agreed in March to sell its stake to China Petroleum & Chemical for $900 million, but the deal stalled after the local investors exercised their right. Glencore, which will fund the Chevron purchase, will support Off The Shelf Investments Fifty Six Pty Ltd. as a technical and financial partner, it said in a statement Friday.
The acquisition, together with a recent deal in
It comes as commodities traders including
The Chevron deal comes less than three days after Glencore announced it agreed to increase its holding in
As other major miners such as Rio Tinto Group and BHP Billiton have focused on bigger dividends, share buybacks and other ways to reward shareholders, Glencore has been an exception. While profits improved during the first half, Glencore kept its dividend unchanged and said in August that it would use its balance sheet to pursue selective growth opportunities.
The deal will add "volume and optionality" to Glencore’s oil and gas trading business, said Paul Gait, an analyst at Sanford C. Bernstein Ltd. in London.
"They have a choice of returning cash to shareholders or buying assets that they think can deliver more than that," Gait said by phone. "If you are a shareholder in Glencore, you probably think Ivan Glasenberg is a shrewd operator that can add value in that process," he said, referring to Glencore’s chief executive officer.
Glencore will ensure that its oil portfolio investment, including the Chevron transaction, is limited to less than $500 million over the next 12 months, the company said in Friday’s statement. The deal for the southern African assets is expected to close in mid-2018, the company said.