Chevron Corporation (CVX.US) intends to acquire Phillips 66 (PSX.US) stake in their joint chemical enterprise.

According to informed sources, Chevron Corporation (CVX.US) is interested in acquiring shares in a chemical joint venture from Phillips 66 (PSX.US), with activist investor Elliott Management Corporation urging the refinery to exit the joint venture. The sources said that Chevron Corporation is seeking to increase its exposure in the petrochemical products field at the right price, and if Phillips 66 is open to it, the joint venture company Chevron Phillips Chemical Co. could become a acquisition target. Regulatory filings show that both Chevron Corporation and Phillips 66 have rights of first refusal on each other's shares. This means that if they want to sell, they must first offer the deal to the other partner. The sources added that Chevron Corporation has been interested in buying out its existing stake for some time. There have been no negotiations so far, and it is unclear whether Phillips 66 is willing to sell these shares and what their value is. Hedge fund Elliott earlier this month announced a plan to adjust its stake in Phillips 66. Elliott stated in its submitted materials that the potential sale value of these shares is around $15 billion. However, this valuation may vary greatly depending on the outlook for the chemical industry profit margins, which are currently close to multi-year lows. Elliott has designated Phillips 66 to sell its 50% stake in CPChem to focus on its core fuel manufacturing business. Elliott stated in an investor report called "Streamline66" earlier this month, "This business could attract strong interest from existing joint venture partners or other buyers." Chevron Corporation CEO Mike Wirth emphasized in an interview on February 5th that the demand for chemicals is growing "very strong" due to an increasing number of people entering the middle class globally, and the greater demand for energy-efficient, lightweight plastics in airplanes and cars. He said, "The demand for petrochemical products will be very strong. This is another area that interests us." In 2000, Chevron Corporation and Phillips 66 merged two medium-sized chemical companies to form the joint venture CPChem. According to data from industry consulting and data provider ICIS, after building profitable plants in the Middle East and along the Gulf Coast of the United States, the company grew to become the 32nd largest chemical company in the world by revenue in 2023. CPChem also has several growth projects, including an $8.5 billion polymer facility in Orange, Texas, and a $6 billion complex in Qatar. Both plants will use low-cost ethane as a raw material, giving them a competitive advantage compared to factories in Europe and Asia that use more expensive naphtha. When asked about future acquisition plans, Wirth told the media that his focus is on completing the $53 billion acquisition of Hess Corporation later this year. He said, "We are in a good position today, so we don't need to do anything. We will only do things that truly fit our company today, if the price is right and can create value for shareholders."