How much did it take for occidental petroleum to buy Citi Phibro?”
L.A.-based Occidental estimates a net investment of $250 million in the deal, which will double its energy trading business. Phibro has turned a profit every year since 1997. Occidental Petroleum Corp. said today it will buy embattled Citigroup Inc.’s commodities trading unit, which has drawn fire for its compensation practices. Los Angeles-based Occidental said its net investment in Citigroup’s Phibro unit would be about $250 million, which represents the difference in value between the trading firm’s assets and liabilities. Phibro’s assets consist primarily of cash and marketable securities, Occidental spokesman Richard Kline said. Adding Phibro to its stable will essentially double the size of Occidental’s existing energy trading business, Kline said. “It brings us added trading scope and depth,” Kline said. And a good chance for increased profits, as well. Phibro has averaged pretax profits of $371 million annually over the last five years, and has turned a profit every year since
By Matthias Rieker and Brian Baskin, Of DOW JONES NEWSWIRES (Updates with background and analysts’ comments.) NEW YORK -(Dow Jones)- In selling Phibro LLC, Citigroup Inc. (C) decided to exit one of its core businesses and sidestep a controversy over compensation that was virtually impossible to win. Occidental Petroleum Corp. (OXY) will buy Citi’s oil-and-gas trading unit at about “net asset value,” both companies said. That value wasn’t disclosed, although Occidental did say its investment will be about $250 million. The reason for the sale appeared to be the annual compensation for Andrew Hall, the successful head of Phibro, of $100 million, which generated a firestorm of controversy for a bank getting extraordinary government support during the financial crisis. Fox-Pitt Kelton analyst David Trone said Phibro’s profits were important to Citi to soak up losses from delinquent loans, but the pressure on limiting compensation left Citi little choice other than to sell it. In addition,
