Royal Dutch Shell has signed an agreement to sell its 75% stake in the China based Tongyi Lubricants to Huo’s Group and private-equity firm Carlyle Group.
The Chinese oil-lubricants business is a joint venture formed by Shell and Huo’s Group, for which the deal was signed in 2006.
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Shell China executive chairman Xinsheng Zhang said: "Nine years ago when Shell acquired Tongyi, we began our win-win cooperation with Huo’s Group.
"By working together in partnership and cooperation, Shell and Huo’s Group have built Tongyi a strong brand with improved profitability and value proposition to customers in China."
Financial details of the transaction, which is subject to regulatory approvals, have not been disclosed.
The deal is expected to be closed either by the end of this year or by early next year.
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By GlobalDataCarlyle Asia buyout team managing director Herman Chang said: "Carlyle’s investments heavily focus on opportunities driven by the rising middle class in China.
"The lubricants industry is a growing market in China due to increasing auto penetration.
"Tongyi is well positioned to tap the market’s potentials with its strong brand, extensive nationwide sales network and experienced team."
Divestment of the unit is in line with Shell’s strategy to reduce its downstream assets in order to focus on competitive and profitable markets.
Besides Tongyi, Shell has also divested other downstream assets including its businesses in Australia and Italy, multiple retail sites in the UK, along with the IPO of Shell Midstream Partners and further drop downs it.
The firm has also announced sales of its marketing business in Denmark and Norway and its LPG businesses in France.
Shell has also declared selling off its shares in Japanese Showa Shell to Idemitsu last month.
