NOVA to buy US Williams Geismar cracker stake for $2.1bn

HOUSTON (ICIS)–Canada-based NOVA Chemicals will pay $2.1bn to acquire Williams’s 88.46% stake in its cracker in Geismar, Louisiana, the companies said on Monday.

Under the deal, Williams Partners will sell its membership interest in Williams Olefins, which owns the stake. According to NOVA, the plant produces approximately 1.95bn lb (884,500 tonnes) of ethylene annually.

The deal is expected to close in summer 2017.

It includes 525 acres (212 ha) of undeveloped land next to the plant and Williams’ interest in the ethylene trading hub in Mont Belvieu, Texas, NOVA said.

After the transaction closes, Williams Partners said its subsidiaries will enter into agreements for NOVA to receive feedstock via Williams’ Bayou Ethane pipeline system

“When the Williams Olefins transaction closes, we expect to be at 97% fee-based revenues driven largely by natural gas volumes,” Williams CEO Alan Armstrong said. “Today’s announcements further strengthen our financial position to support Williams’ peer-leading, low-risk growth portfolio.”

Williams Partners said it plans to use the proceeds from the transaction to pay off its $850m term loan, as well as partly fund planned capital and investment expenditures.

NOVA CEO Todd Karran noted several other projects tied into the company’s strategy in the US Gulf Coast, including the proposed joint venture (JV) with Borealis and Total involving the latter’s polyethylene facility in Bayport, Texas.

NOVA has also planned the development of a light feed cracker in Port Arthur, Texas and a polyethylene (PE) facility in Bayport, which it expects to start up in 2020.

Image: These balls are made of PE, the main use for ethylene. Source: Gene Blevins/REX/Shutterstock