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TOTAL (TOT) to Divest Specialty Chemicals for $3.2 Billion


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Integrated oil & gas company TOTAL S.A. (TOT - Analyst Report) announced that it has signed an agreement with The Carlyle Group (CG - Snapshot Report) to sell its specialty chemicals’ affiliate, Atotech B.V., for $3.2 billion.

Divestment a Part of TOTAL’s Strategy

The agreement to sell the specialty chemical business comes as part of TOTAL’s portfolio management strategy, given that Carlyle’s asset base is a strategic fit for TOTAL’s business plans. The deal is also in line with TOTAL’s $10 billion divestment program over the 2015–2017 time frame.

TOTAL’s Acquisitions & Sales

TOTAL is forging ahead with its asset sales and buyouts in a bid to reshape the portfolio and optimize profits from its existing assets. During third quarter, the company signed an agreement with Qatar Petroleum, under which it acquired a 30% interest in the giant offshore Al-Shaheen oil field. The agreement will be valid through 25 years starting Jul 14, 2017.

However, TOTAL has to compete with the likes of ExxonMobil (XOM - Analyst Report) , Royal Dutch Shell, Chevron Corporation (CVX - Analyst Report) and BP Plc. for acquiring assets and licenses for the exploration and production of oil and natural gas, as well as for the sale of manufactured products based on crude and refined oil.

In the second quarter, TOTAL acquired assets worth $206 million, primarily comprising shares in Saft, and sold assets worth $472 million, consisting mainly of its retail network in Turkey.





New Strategy to Counter Weakness

Like every other major company operating in the oil and gas space, TOTAL is suffering due to the weak commodity price environment. To counter this, TOTAL’s management aims to continue leveraging its diverse asset portfolio to maximize profits, which is in sync with its long-term growth objectives.

TOTAL’s long-term outlook is to boost annual production by an average 5% between 2014 and 2020 (up to 2019 as per the prior guidance). The company commenced started four projects this year and already has 10 projects under construction, which will give support to management’s production goals. (Read more: TOTAL Revises Strategy to Profit amid Weak Oil Prices)

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