Russia’s Sibur buys petrochemicals rival

Russia’s biggest petrochemicals company has bought a rival business in a move it says will eventually make it one of the world’s top producers of polymers and synthetic rubber.

Sibur on Friday announced the acquisition of a controlling stake in the processing operations of oil and gas refiner Taif. Under the terms of the deal Taif investors will receive a 15 per cent stake in Sibur.

Sibur is expected to consolidate the remaining stake within a few years, Dmitry Konov, chief executive, told the Financial Times. He did not disclose the value of the deal.

“Creating a larger and more diversified company is timely as the global competition is harsh and will get harsher,” he said.

“Synergy is a big part of this deal. We are combining gas and oil. Gas is more expensive, oil is cheaper,” he added. “Adding new feedstock to our portfolio is strategically right. It makes a better quality company with various resource flows. It offers greater opportunities.”

The deal will boost Sibur’s annual production capacity 40 per cent above 2020 levels to more than 7.2m tonnes, according to the company.

The agreement comes in the middle of Sibur’s $19bn production expansion push and as it decides on when to launch an initial public offering.

Leonid Mikhelson, Sibur’s main shareholder, said in February that timing “wasn’t bad” for an IPO, days after chief financial officer Peter O’Brien told the FT an offering was on hold for the next two years.

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Konov said the IPO would not take place until the deal’s close, which he did not expect for at least five to six months. However, he said it would not have to wait for the full consolidation of Taif’s assets.

“We don’t have a specific date, but an IPO can be done before a 100 per cent consolidation. It’s not that that’s what we want to do but it can be done if there are no issues with approvals and if we want it,” he said.

The deal expands not only Sibur’s capacity but also the eastern Russia-focused geography, giving it a strong foothold in central Russia, with greater access to the European market.

China’s Sinopec and Silk Road Fund’s 10 per cent stakes in Sibur will each be reduced to 8.5 per cent.

This article has been amended to reflect that the deal’s value was not disclosed