Philip Morris and Altria in merger talks as Marlboro fades and e-cigs light up

MOSCOW (MRC) -- Marlboro maker Philip Morris International Inc said it was in talks to reunite in a merger with Altria Group Inc (MO.N) following its 2008 spin-off, as the tobacco giants seek to pool resources in the fast growing e-cigarette market, said Reuters.

The merger between the two companies, the biggest ever in the consumer sector and the fourth-largest deal of all time, would create a tobacco giant with a market capitalization of approximately USD200 billion.

It would come two years after British American Tobacco Plc (BATS.L) bought out Reynolds American Inc for USD49 billion, underscoring how the decline in cigarette smoking globally is pushing tobacco companies to seek scale and pool resources in their development of alternative products.

Under the terms of the all-stock merger being discussed, Altria shareholders would receive no premium and own between 41% to 42% of the combined company, with Philip Morris shareholders owning the remainder, according to a source familiar with the matter who was not authorized to discuss the details publicly.

The board of the combined company would be split evenly between Philip Morris and Altria directors, the source said. If the deal negotiations prove successful, an agreement could be reached by the end of September, the source added.

The two U.S.-headquartered companies separated 11 years ago to focus on different geographic markets, at a time when tobacco stocks generated steady yields. Since then, the industry has been disrupted by a move away from traditional smoking into e-cigarettes and vaping.

The two have responded with new offerings. Philip Morris, which operates outside the United States, has developed a heated tobacco product called iQOS. Altria, which operates in the United States and still sells Marlboro in the country, acquired a 35% stake in vaping company Juul Labs Inc last year for USD12.8 billion.

Some analysts and investors fretted that the lack of geographic overlap between the two companies could limit the value of operational synergies. Philip Morris and Altria shares ended trading on Tuesday down 7.8% and 4%, respectively, giving the companies market capitalizations of USD112 billion and USD84.5 billion.
MRC

MOSCOW (MRC) - Aramco Trading Company (ATC) sold its first-ever cargo of U.S. West Texas Light (WTL) crude, with a South Korean refiner the buyer, as the Saudi Aramco unit expands its U.S. oil dealings to boost trade volumes, four people familiar with the matter said, as per Reuters.

ATC is key to Saudi Aramco’s strategy as it expands its refining and petrochemical operations to boost global sales. The trading unit has been buying U.S. crude from Texas refinery Motiva to re-sell in Asia, the people said.

ATC has been shipping U.S. oil such as West Texas Intermediate (WTI) Midland crude, Eagle Ford condensate and sour grade Mars to refiners in Japan, South Korea, Taiwan, Thailand and the United Arab Emirates since last year, they said.

It expanded that selection of U.S. crudes earlier this month, loading its first-ever 1 million-barrel cargo of WTL, the people said. The shipment is expected to arrive at Hyundai Oilbank’s refinery in Daesan in October, they said.

This was also Hyundai Oilbank’s first WTL crude purchase, two of the sources said. The sources declined to be named as they were not authorized to speak to the media. Saudi Aramco and Motiva did not respond to a request for comment. Hyundai Oilbank declined to comment.

The shipment follows an agreement this year for Saudi Aramco to take a 17% stake in Hyundai Oilbank, South Korea’s smallest refiner by capacity. The firms also signed two 20-year contracts for Aramco and its trading arm to supply 250,000 barrels per day (bpd) of crude from January 2020.

ATC was set up in 2012 initially to market refined products, base oils and bulk petrochemicals, but it has expanded into crude, competing with trading and international oil companies.

The company is using Motiva’s expertise in sourcing and pricing U.S. crude to expand its trade volume, the people said. Because of its experience as a refiner, Motiva is able to get good prices for U.S. oil, one person said.

In return, ATC buys Iraqi Basra crude for Motiva when the market is favorable, the people familiar with the matter said.

The United States has become the world’s biggest oil producer as shale oil discoveries have pushed its output above 12 million bpd, sending U.S. exports to a record above 3 million bpd since a crude oil export ban was lifted in 2015.

Over the past year, more of the output from the Permian Basin, the biggest U.S. shale field, has been of a super light oil known as WTL with an API gravity - a measure of density - similar to condensate.

ATC has especially stepped up condensate sales to refiners in South Korea and the United Arab Emirates after they stopped importing the petrochemical feedstock from Iran due to U.S. sanctions, trade sources said.

Besides supplying U.S. Eagle Ford condensate, ATC’s WTL shipments could increase as more of the light oil becomes available for export after new pipelines connect shale oil production from the Permian Basin to U.S. Gulf Coast terminals, one of the people said.

Plains All American’s 670,000-bpd Cactus II pipeline began commercial deliveries this month. The pipeline segregates WTL barrels to maintain quality from the oilfield to the dock, which is vital to Asian refiners, the people said.

“Asia should have demand for it with their (condensate) splitters and capabilities to run ultra light crudes,” one source said. South Korea surpassed Canada to become the biggest buyer of U.S. oil in June.
MRC

MOSCOW (MRC) -- British oil major BP Plc agreed to sell all its Alaskan properties for USD5.6 billion to privately held Hilcorp Energy Co, exiting a region where it operated for 60 years, as per Hydrocarbonprocessing.

The deal, which includes interests in the most prolific oil field in US history at Prudhoe Bay, and the 800-mile (1,300-km) Trans Alaska Pipeline, is part of BP's plan to raise USD10 billion over the next two years through asset sales to further strengthen its balance sheet, it said.

For years, BP has been reducing its role in Alaska, where oil production for fallen with declines at the Prudhoe Bay field. BP, which began working in Alaska in 1959, is the operator and holds a 26% stake in Prudhoe, where production began in 1977.

In 2014, BP sold Hilcorp half its share of an Alaskan project. This year, the two were due to decide whether to go ahead with an ambitious USD1.5 billion offshore project that requires construction of a manmade island.

The acquisition fits Hilcorp's historical strategy of acquiring mature fields from major oil companies and slashing costs. The company, founded in 1990 by Texas oilman Jeffery Hildebrand, has operations across the United States.

A Hilcorp spokesman did not reply to a request for comment.

“This deal vaults Hilcorp to be the second-largest Alaska producer and reserves holder, behind only ConocoPhillips," said Rowena Gunn, a Wood Mackenzie energy analyst. Hilcorp must show it can maintain output at Prudhoe Bay, where BP has been the operator, she said.

Prudhoe has to date produced over 13 billion barrels of oil and is estimated to have the potential to produce more than one billion further barrels. BP's net oil production from Alaska in 2019 is expected to average almost 74,000 barrels per day.

The deal calls for a USD4 billion initial payment to BP with the remaining USD1.6 billion in earnout payments over time.

"We are steadily reshaping BP and today we have other opportunities, both in the US and around the world, that are more closely aligned with our long-term strategy and more competitive for our investment," BP Chief Executive Officer Bob Dudley said.

The Alaska sale pushes BP closer to its goal of selling USD10 billion of properties following the 2018 acquisition of BHP's US shale assets, a USD10.5 billion deal that catapulted the London-based company into a major Texas shale producer.

BP previously had said that most of the disposals would come from its shale assets, particularly natural gas fields. The sale would help BP reduce its debt, which rose to 31% of its market capitalization by the end of June.

The sale faces regulatory approvals, including by the state of Alaska.

The divestment comes months after BP agreed to sell its interests in the Gulf of Suez oil concessions in Egypt to Dubai-based Dragon Oil for an undisclosed sum.

BP also said about 1,600 employees were currently part of its Alaskan business, adding that it was "committed to providing clarity about their future as soon as possible as part of the transition process with Hilcorp."

As MRC informed earlier, British oil and gas company BP will increase investment in the United States after the lowering of tax rates under President Donald Trump, Chief Executive Bob Dudley said in February 2018.
MRC

MOSCOW (MRC) -- Canadian General-Tower Ltd. (CGT), a Cambridge, Ont.-based supplier of coated fabric and film products, has acquired Liancourt, France-based companies AlkorDraka Industries and Alkor Medical Tubing, specialists in the formulation of plastic films, said Canplastics.

The financial terms of the deal have not been disclosed. The new trade names for the European businesses will now be CGT Alkor and CGT Medical Products, CGT said in a statement.

As a previous supplier of high-quality pool liners to CGT Europe, AlkorDraka Industries now covers eight business sectors: Ceiling and wall decoration, coatings for window marketing, dance floor films, consumer product packaging, pool liners, containment film, movie screens and various technical applications.

“This new development is an important strategic opportunity and comes with great excitement for the future of CGT as we continue to fulfill our global growth endeavors,” CGT CEO Craig Richardson said. “The initial reaction we have received from our stakeholders has been extremely positive as CGT moves toward investing both personnel and capital into the European markets to grow these newly acquired businesses.”

The acquisition will provide CGT, which is celebrating its 150th anniversary this year, with a strategic base of operations in Europe, Richardson said, adding to the company’s existing portfolio in North America and China.

CGT manufacturers coated fabrics and films for the automotive, building products, and pool liner sectors.
MRC

MOSCOW (MRC) -- Trinseo, a global materials company and manufacturer of plastics, latex and rubber, has announced that effective September 16, 2019, the company is increasing the prices of all Styrene Butadiene and Styrene Acrylate products sold into the carpet, paper, and paperboard markets in North America, as per the company's press release.

The increase will be USD0.06/dry lb. for all indexed and non-indexed customers, as contracts allow.

This increase is necessary due to changes in market conditions and to offset rising costs to manufacture and transport our products, and to remain a strong and reliable supplier.

As MRC informed before, Trinseo last raised its prices for all PS, ABS and SAN grades on 1 Jue 2018, as stated below:

- STYRON general purpose polystyrene grades (GPPS) - by EUR50 per metric ton;
- STYRON and STYRON A-Tech high impact polystyrene grades (HIPS) - by EUR50 per metric ton;
- MAGNUM ABS resins - by EUR35 per metric ton;
- TYRIL SAN resins - by EUR35 per metric ton.

According to ICIS-MRC Price report, in the Russian market, the general price range of the Nizhnekamskneftekhim's material did not change. Major traders offered Nizhnekamskneftekhim's injection moulding and extrusion grade GPPS at roubles (Rb) 90,000-91,000/tonne and HIPS - at 94,000-95,000/tonne CPT Moscow, including VAT.

Trinseo is a global materials company and manufacturer of plastics, latex and rubber. Trinseo's technology is used by customers in industries such as home appliances, automotive, building & construction, carpet, consumer electronics, consumer goods, electrical & lighting, medical, packaging, paper & paperboard, rubber goods and tires. Formerly known as Styron, Trinseo completed its renaming process in 1Q 2015. Trinseo had approximately USD4.6 billion in net sales in 2018, with 16 manufacturing sites around the world, and approximately 2,500 employees.
MRC