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Wednesday, July 12, 2006

Sasol Cleaning Up Portfolio

By William Trent, CFA of Stock Market Beat

With its coal conversion technology suddenly in the limelight (and possibly requiring $ billions of investment) Watch List company Sasol (SSL) is looking to shed some weight (and raise some cash) in other parts of its portfolio.

Business Report - Sasol received bids for chemical unit
Bidding has started for the chemical unit of South African petrochemical group Sasol , with negotiations with short-listed bidders to be held in July and August, the group said on Tuesday. Sasol is selling most of its Olefins & Surfactants (O&S) chemical unit, although keeping the unit’s South African business. Early last month the group said 19 firms had received information to prepare their bids.

The sale will affect the overseas operations of the chemical unit it bought more than four years ago, most of which is concentrated in Germany, Italy and the United States. Last August, Merrill Lynch said the sale might fetch up to 900 million euros ($1.15 billion), and backed the sale, provided that oil prices do not crash below $15 per barrel. Sasol in 2001 bought the chemical business then known as Condea from Germany’s RWE Dea for 1.3 billion euros, and most of this business is held in Sasol O&S.

Sasol says it wants to sell most of the O&S unit because it is not well-integrated in its plans, which include using its chemical division to provide feedstock for units such as the group’s gas-to-liquid (GTL) initiative. - Reuters

Although the sale doesn’t look to fetch as much as Sasol paid, focusing on the energy business makes sense these days.

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