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CITYAM.COM
TUESDAY 4 APRIL 2017
NEWS
07
Ineos snaps up oil major’s pipeline
CAITLÍN MORRISON
@citycait
OIL GIANT BP yesterday announced it
has agreed to sell its Forties pipeline
system (FPS) to Ineos for a total consideration
of up to $250m (£200m).
The groups were first reported to
be in talks over a potential sale last
month.
The assets being sold include the
main Forties offshore and onshore
pipelines and other associated
pipeline interests and facilities. Ineos
will make a cash payment of $125m
on completion and an earn-out
arrangement over seven years that
totals up to $125m.
John McNally, chief executive at
Ineos olefins and polymers, said the
company was “excited to get stuck
in” at the FPS. McNally told City A.M.
300 employees would be moving to
Ineos as part of the deal, with no job
losses planned.
“Ineos have been saying for quite
some time that we wanted to move
into North Sea oil and gas, this is the
next step. We want to apply our skills
and know-how to improve the
economies of these assets,” he said.
According to McNally, Ineos and
BP had been in talks for some time
about a potential deal, and added:
“We’ve reached a deal both sides are
happy with.”
The Forties pipeline was opened in 1975 to transport oil from the Forties oilfield
Bombardier
and BP set to
curb exec pay
Reckitt mulls
food unit sale
to raise funds
REBECCA SMITH
AND SHRUTI TRIPATHI CHOPRA
@BexKSmith @shrutitripathi6
BP IS set to cut its chief executive Bob
Dudley’s pay for the next three years
amid fears of a shareholder revolt.
The oil giant has decided to reduce
Dudley’s maximum long-term
incentive plan award from seven
times his $1.85m (£1.48m) basic
salary to five times, Sky News
reported last night.
Details of Dudley’s future pay
policy will be disclosed in its annual
report later this week.
Meanwhile, Bombardier is set to
defer paying more than half of last
year’s planned compensation for its
six highest paid executives until 2020
after a public backlash against the
announcement.
The firm said it was “sensitive to
the public reaction to our executive
compensation practices”, and chief
executive Alain Bellemare said the
deferred payment will only be
payable if performance objectives are
achieved; “delivering value to all our
shareholders, including the people of
Quebec and Canada”.
Hundreds of people had gathered
in front of the firm’s Montreal
headquarters on Sunday to protest
against the payouts; Bombardier was
set to give $32.6m (£26m) to
executives, up from $21m in 2015.
The plane and train maker had
increased 2016 compensation nearly
50 per cent, after receiving $1bn in
taxpayer aid and announcing its
intention to cut more than 14,000
jobs worldwide.
Pierre Beaudoin, Bombardier’s
executive chairman, said: “After
listening to the recent public debate
about the compensation of senior
executives at Bombardier, I have
asked the board of directors to reset
my 2016 compensation, reducing it to
the 2015 level.”
COURTNEY GOLDSMITH
@courtneynoelg
RECKITT Benckiser (RB), the maker of
Durex condoms and Dettol cleaners,
yesterday confirmed it is beginning a
strategic review of its food business.
“French’s Food is a truly fantastic
business with great brands, people
and a history of outperformance. It is
nevertheless non core to RB,” the
company said in a statement.
“We have therefore decided to
initiate a strategic review of food
where we will explore all options for
this great business.”
The news follows reports that RB
was planning to sell its £2bn food
division to help fund its takeover of
US baby formula maker Mead
Johnson for $17.9bn (£14.3bn). RB’s
push to become a bigger consumer
health player means its food division
has become a low priority.
Food accounts for just five per cent
of the company’s global sales.
The deal would see RB ditching
brands including French’s mustard
and Frank’s Red Hot sauce in a
transaction that could raise more
than $3bn (£2.3bn).
US giant Kraft Heinz is expected to
show an interest in the auction after
its takeover bid for Unilever in
February fell apart.
Darren Shirley, analyst at Shore
Capital, said RB’s food unit is in good
health, delivering five per cent of
constant currency revenue growth in
2016 with sales of £411m.
“While any disposal of food would
be helpful in the deleverage of the
RB business post the proposed Mead
Johnson infant nutrition acquisition,
we would in no way expect it to lead
us to change our ‘hold’ stance on
RB’s stock,” Shirley said.
Shirley added press speculation
the deal could raise £2.4bn appears
“a little demanding” against a global
peer group valuation range.
Babcock wins £360m Royal Navy deal
Babcock will provide servicing for the Royal Navy’s flagships
COURTNEY GOLDSMITH
@courtneynoelg
ENGINEERING outsourcing firm
Babcock International yesterday
announced it was selected as a
preferred bidder in a deal with the
Ministry of Defence worth around
£360m.
Shares in the FTSE 100 company
lifted more than one per cent before
closing 0.4 per cent higher at 885.5p
when it said it would provide
support for the Royal Navy’s fleet of
warships over seven years.
The news is a boost to the
company which last week said its
nuclear reactor clean-up contract
would be terminated early because
of a “defective” government
procurement process, sending its
shares tumbling.
Babcock will manage the technical
configuration of systems for the
Royal Navy’s new Queen Elizabeth
class aircraft carriers and Type 45
destroyers, supply spares and provide
in-service support.
Chief executive Archie Bethel said
the deal represents “a real vote of
confidence in our capabilities and
performance as the Royal Navy’s key
support partner.”