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Italy's Eni in talks with potential buyer for Versalis

December 21, 2015
Energy & Chemical Value Chain

(Reuters) – Eni is in talks with a potential buyer of a majority stake in its Versalis chemicals business part of the Italian oil company’s plans to slim down and focus on oil and gas exploration.

Two trade union leaders said on Thursday an Eni board meeting was expected to give the go ahead to exclusive talks with U.S. investment firm SK Capital.

Eni CEO Claudio Descalzi, talking to reporters on the sidelines of a meeting, said talks were under way with a bidder for Versalis but also said they could be extended to other possible buyers.

“We have in the past spoken to more than one party, at the moment we’re speaking to one.” The CEO said nothing had been decided yet.

The state-controlled energy group has pledged to sell 8 billion euros ($8.7 bln) of assets over the next four years to help fund growth and support shareholder returns.

“We need to find funds to help develop the business,” Descalzi said.

Descalzi, a former head of Eni’s upstream exploration and production division, denied Versalis was on the agenda of Eni’s board meeting on Thursday.

SK Capital, which focuses on investments in speciality materials, chemicals and healthcare sectors, could not be reached for comment.

Eni said in October it was looking for a partner to help it run Versalis, which one Milan analyst said had an enterprise value of around 1.5 billion euros.

Descalzi said a series of guarantees and pre-conditions put in place made a sale more difficult. These included keeping Versalis whole for five years, not cutting the workforce for three, and keeping the company in Italy.

Eni has spent time and money turning around Versalis by refocusing the business on speciality and green products and promoting its international development.

Since 2000, the division has consumed 5.8 billion euros in cash, recorded net operating losses of more than 3 billion euros and staff numbers have dropped to 4,000 from 14,000, Eni said.

Europe’s chemicals companies are facing major challenges as the industry increasingly moves eastward drawn by economic growth and market opportunities in Asia. ($1 = 0.9220 euros) (Reporting by Giancarlo Navach and Stephen Jewkes; Writing by Agnieszka Flak; Editing by David Holmes and Jane Merriman)

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