Houston's Lyondell selling division for $1.2 billion

Lyondell Chemical Co. has agreed to sell its inorganic chemicals division to a Saudi Arabia's National Titanium Dioxide Co. in deal worth $1.2 billion, the companies said in a joint statement today.

The Houston firm will receive $975 million after taxes to unload a subsidiary that is the world's second-largest producer of titanium dioxide, a white pigment used in consumer products such as paint and toothpaste.

Lyondell's CEO and president Dan. F. Smith said the move will allow his company to accelerate debt payments and "focus our resources on capturing the synergies" between its Houston refinery and chemicals business.

Lyondell, which is North America's third-largest independent publicly-traded chemical company, indicated last fall it would re-evaluate its Millenium Inorganic Chemicals subsidiary to determine whether made sense to keep it.

Though only acquired in December 2004, the unit came under review when Lyondell said last fall it was spending $2.1 billion to take over a Houston refinery that had been jointly owned by Citgo and Lyondell.

David Harpole, a Lyondell spokesman, said the company agreed to sell the division because the offer was right and because it needed to focus resources "to fully integrate" the refinery.

The deal will make the buyer, which operates under the name Cristal, a much bigger player in the chemicals business. Cristal will vault from the being world's ninth-largest producer of titanium dioxide to the second-largest.

"The acquisition of Millennium Inorganic Chemicals is an exciting component of our continued growth story and increases our global presence as we'll gain facilities in Europe and Australia as well as North and South America," said Talal Al-Shair, chairman and CEO of Cristal.

Approximately 2,900 employees are affiliated with the Lyondell business unit, which is headquartered in Hunt Valley, Md. Apart from operations around Baltimore and in Ohio, the unit has facilities in the United Kingdom, France, Australia and Brazil.

Cristal said it intends to continue operating the assets acquired in the transaction with Lyondell.

The deal, which is subject to regulatory clearance and other conditions, is expected to close in the first half of 2007, the companies said.

source:www.bloomberg.com