Shell sells uniform lubricants

After more than six months of seeking to sell all the shares of the unified lubricant, Shell finally found a buyer. On Friday, Shell announced that it will sign an equity transfer agreement to transfer 75 percent of Uniform Lubricants to the Hohhot Group and the Carlyle Group.

Despite giving up uniform lubricants, Shell's investment in the Chinese lubricants market is still overweight. At the end of June 2015, Shell had just opened its eighth lubricant blending plant in China.

In an interview with an analyst, an analyst said that Shell's sale of a unified but instead investing in a new lubricant factory indicates that it is still optimistic about the future prospects of China's lubricant market, and its reason to sell uniform lubricants is because both parties Cooperation has not achieved the desired results.

Low oil prices promote the acceleration of transactions

As it is optimistic about the prospects of China's lubricants market and intends to expand in China, in 2006, Shell acquired a 75% equity interest in Uniform Lubricants from a unified entity under the umbrella of Huo Zhenxiang, the founder of Uniform Lubricants, and established a joint venture Shell Uniform (Beijing) Petrochemical Co., Ltd. The company has become the largest international lubricant supplier in the Chinese market. Nine years later, Shell returned the unified equity to the Huo Shi Group, chairman of Huo Zhenxiang.

For the reason of the transfer, Shell's response is: "The company's current focus is to optimize its own lubricant product line, in the future will strengthen Shell's own brand of lubricants influence."

In fact, as early as December of last year, Shell began to publicly sell the unified shares at a price of 350-500 million U.S. dollars. Since then, Lubricants have once linked “Crisis” to CNOOC, Blackstone, etc., but there has been no further transaction. .

Another analyst believes that for a transnational company such as Shell, the decline in international crude oil prices has accelerated its pace of selling unified shares. "Since the fall in oil prices, international oil companies have been optimizing their asset allocation. Uniform lubricants have some conflicts and competition with Shell's brands, and its own performance has not yet reached the level expected by Shell."

In fact, since the drop in oil prices last year, major international oil companies have been trying to reduce their expenditures and optimize their assets. Shell has also formulated a plan to remove assets and maintain cash flow.

Just a week ago, Shell had just announced its second quarter operating situation, its net income was 3.84 billion US dollars, a sharp drop of 37.35% year-on-year. Subsequently, Shell announced that it will cut 6,500 employees from 100,000 employees and will continue to squeeze capital investment for the second consecutive year. It will further reduce its investment budget for 2015 by 3 billion U.S. dollars to 30 billion U.S. dollars.

Cooperation has not achieved ideal results

Although Shell sold the shares of Uniform Lubricants, the investment in the Chinese Lubricants Market is still accelerating. Just half a year after it disclosed its intention to sell unified equity, Shell was just put into operation in China's most advanced lubricant blending plant. At the end of June, Shell's eighth world-class lubricants blending plant in China was put into operation in Tianjin. The annual output of the plant is 330 million liters, with a capacity of 500 million liters, which will become Shell's largest in China after expansion. Lubricant blending plant.

Analysts believe that despite the current slowdown in China's economic growth, but China's oil market outlook is still more than the rest of the world, so Shell will continue to make efforts here. The reason why Shell sells unified lubricants is because the performance of unified lubricants has not surpassed Shell's expectations in the past ten years after the completion of the acquisition.

In 2006, as the vanguard of the domestic private lubricants market, unified lubricants are booming. The data shows that at the time there were 2,000 distributors and 90,000 retailers in the country, with an annual sales income of more than 3 billion yuan, accounting for 10% of the national market share.

An analyst said that at the time of the domestic market, the unified lubricants did not have enough basic raw material oil, and Shell had a huge base oil procurement system in the world. At the same time, it was also in urgent need of expanding its market share in China. Therefore, the two parties' transactions were considered It is a win-win cooperation.

After Shell acquired a unified lubricant, almost no sales of unified lubricants were announced. According to statistics from Tencent Finance, the production of unified lubricants in 2014 was almost unchanged from that of 2006.

A person close to unity confirmed to reporters that after Shell acquired a unified lubricant oil company, due to the differences in corporate culture, management, and business philosophy between the two parties, it led to the unification of a large number of senior and middle-level managers of lubricants. "After the completion of the acquisition, its brands achieved good development with the help of unified lubricant sales channels, but now the market competition is fierce, and domestic brands have been hit by a large number of foreign brands in the past two years, which also made the lubricants in the past two years uniform. The growth rate of development is on the contrary slowing down." Analyst analysis.

For the operating performance of Lubricants in recent years, Shell China's spokesman Shen Gang did not disclose to reporters, but he did not agree with the outside world on the statement that the development of uniform lubricants is stagnant. "After the acquisition, the unified lubricants in the profitability and consumption There is an increase in value," said the analyst.

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