Phillips 66 Sells Stake in Swiss JV for $1.24 Billion, Shares Dip

Phillips 66 Sells Stake in Swiss JV for $1.24 Billion, Shares Dip

Phillips 66 (PSX) is making a significant move to streamline its portfolio. The company announced on Monday that it has finalized an agreement to sell its 49% stake in Coop Mineraloel AG (CMA) to its Swiss joint venture partner for a hefty 1.06 billion Swiss francs, which translates to approximately $1.24 billion.

The deal includes a 1 billion Swiss franc sale price (around $1.17 billion) and a 60 million Swiss franc (roughly $70 million) dividend for FY 2024. This dividend is slated to be paid before or at the closing of the transaction. Phillips 66 anticipates that the proceeds from this sale will be instrumental in supporting its strategic priorities, including initiatives aimed at increasing shareholder returns.

The transaction, however, is contingent upon approval from the Swiss Competition Commission. If all goes according to plan, the deal is expected to close in the first quarter of 2025. It’s worth noting that the sale price is subject to adjustments based on the final dividend amount.

Mark Lashier, chairman and CEO of Phillips 66, highlighted the significance of this deal: “This transaction marks significant progress in delivering on our commitment of over $3 billion in divestitures.” The company’s commitment to strategic divestitures is clearly evident in this move.

In terms of market reaction, PSX shares are down 1.78% at $133.01 in premarket trading on Tuesday. This dip reflects the market’s initial response to the news.

For investors interested in gaining exposure to the oil refining sector, two ETFs worth considering are the VanEck Oil Refiners ETF (CRAK) and the iShares U.S. Oil & Gas Exploration & Production ETF (IEO).

Phillips 66 is scheduled to report its third-quarter 2024 financial results on October 29. This upcoming earnings report will offer further insights into the company’s performance and future outlook. Investors will be closely watching to see how the company’s recent divestment activities are impacting its financial performance.