Shares of Sasol (NYSE:SSL) had surged more than 11% by 1:45 p.m. EST on Tuesday. Fueling the energy and chemical company's stock was the sale of its stake in Gemini HDPE.
Sasol's North American chemicals subsidiary has agreed to sell its 50% membership interest in Gemini HPDE to INEOS, a leading global chemical producer. The company will receive $404 million for the stake. The Gemini plant, in La Porte, Texas, produces and sells bimodal high-density polyethylene (HDPE), used for gas and water distribution pipes.
The sale is another step toward achieving Sasol's strategic and financial goals. It accelerates its focus on specialty chemicals and gives it the funds to reduce debt. The company plans to complete a debt restructuring transaction concurrent with the Gemini sale's closing to help improve its financial profile. This transaction follows the sale of its air separation business to Air Liquide in September and a joint venture with LyondellBasell in October, in a steady stream of progress on its strategic shift.
Sasol took another important step toward achieving its strategic target of becoming a financially stronger specialty chemicals company by selling its 50% stake in Gemini. The deal helps it accomplish both goals by exiting the HDPE business while providing more cash to repay debt. That improvement makes it a more appealing option for investors seeking a pure play on specialty chemicals.