How Sir Jim Ratcliffe built INEOS into the UK’s biggest private company

Until his acquisition of a 25 per cent stake in Manchester United, one of the world's richest football clubs, few outside the business world had heard of Sir Jim Ratcliffe. But the story of his inexorable rise, as he spearheaded the growth of chemicals giant INEOS, is a remarkable tale of strategic acquisitions and shrewd leadership.

Today, INEOS stands as the UK’s biggest private company and the fourth largest in its industry, a testament to a growth strategy heavily influenced by Ratcliffe's vision and execution.

INEOS traces its roots back to 1992, and, under Ratcliffe’s leadership, the London-headquartered company’s seemingly relentless M&A activity has helped it to develop into a business comprising around 20 standalone units, generating more than $60 billion (approximately £48 billion) in annual revenue.

Largely focused on the chemical substances and petrochemicals industries, the group’s acquisitive activity has seen it expand far beyond this into areas including textiles, automotive, pharmaceutical, construction, packaging and, perhaps most notably, professional sports.

Long eschewing the payday that could be offered by a public listing, Ratcliffe has kept INEOS resolutely a private company, headed by himself, along with CEO Andy Currie, Finance Director John Reece, and Non-Executive Director Jim Dawson.

Ratcliffe and his leadership team are closely involved in the businesses they acquire, whilst simultaneously allowing them to function as standalone operations, ensuring they retain their sector-specific expertise and company identity, without becoming just another part of one overarching group.

This approach to acquisition and integration has helped Ratcliffe to establish an extremely high success rate for the businesses INEOS takes over, with the company claiming that around 80 per cent of its acquisitions are successful – a far cry from a recent Harvard Business Review report which stated that between 70 and 90 per cent of acquisitions fail.

Ratcliffe is in the news more prominently than ever at the moment, following INEOS’s £1.3bn acquisition of a 25 per cent stake in Manchester United F.C. (still to be finally ratified). The protracted deal, while admittedly probably something of a passion project for Ratcliffe (an avowed Man Utd fan), also demonstrates his tenacity when striking deals.

The agreement was concluded more than a year after club owners the Glazer family began exploring a potential sale and Ratcliffe had to see off a rival in the form of Qatar’s Sheikh Jassim bin Hamad al-Thani who was seeking to acquire the entire club for in excess of £5 billion.

But this is just the latest megadeal in a journey that has seen Ratcliffe build INEOS into one of the biggest companies in the world via a sharp growth trajectory that has leant heavily on M&A activity, with more than 80 acquisitions over its 25-year-plus history and a number of other deals, including many joint ventures.

A growth story defined by M&A
The company’s story began in earnest in 1992, when founder Ratcliffe (at the time a director at US private firm Advent International) formed Inspec with John Hollowood in order to execute a management buy-in of the chemicals division of British Petroleum (BP). Three years later, in 1995, Inspec became Inspec Ethylene Oxide Specialities following its £78 million acquisition of BP’s ethylene oxide, and glycol businesses.

Then, in 1998, Ratcliffe established INEOS in order to acquire Inspec’s Antwerp, Belgium ethylene oxide facility in an £84 million deal, which involved £72.5 million in funding from BT Alex Brown and £10 million from Scottish investment firm Murray Johnstone, along with a £1.5 million investment from the INEOS management team.

From that point on, Ratcliffe grew the company rapidly through a series of acquisitions. INEOS’s first phase of growth, from 1998 to 2008, saw the company make 22 acquisitions in the space of 10 years. These included such major acquisitions as its 2001 takeover of ICI’s commodity chemicals business and, most importantly, its 2005 takeover of BP’s olefins and derivatives and refining subsidiary Innovene.

At the time, Innovene’s turnover stood at around $25 billion, compared to INEOS’ $8 billion. The $9 billion deal roughly quadrupled INEOS’ turnover and established it as one of the world’s leading petrochemicals businesses.

Since then, the company’s acquisition-driven growth has continued. Despite falling production and a drop in earnings and sales, Ratcliffe led the group through the global recession of 2008, which led to one of its major competitors LyondellBasell declaring bankruptcy.

During the financial crisis, Ratcliffe pivoted INEOS’s M&A strategy, moving away from acquisitions and instead focused on joint ventures, while undertaking a significant number of restructurings of companies within its portfolio, as well as a raft of disposals.

During 2009, the group made zero acquisitions for the first time in a year since 2000 and from 2010 to 2013 completed just five acquisitions. During this time, Ratcliffe instead secured a series of major joint ventures – including PetroINEOS, a 50:50 strategic JV with INEOS and PetroChina combining INEOS’ refining operations at Grangemouth, Scotland and Lavera, France with PetroChina’s upstream raw materials offering, and its Styrolution, the 50:50 partnership of its styrene business with BASF.

Since then, Ratcliffe has ramped up INEOS’s acquisitive activity more than ever, completing close to 50 acquisitions since 2014, as he continues to target deals in INEOS’s core areas of chemicals, oil and gas, while increasingly exploring deals that take it to new areas, such as sports, automotive and even hospitality.

Above: Styrolution figures in 2023

INEOS’ acquisition strategy: The broad strokes
Ratcliffe’s acquisition strategy, typically, has involved targeting “unfashionable” assets – essentially, assets that the owner or the wider market does not fully understand or appreciate. That is not to say that he relies on distressed assets, rather “good-quality assets”, in Jim Dawson’s words, that are no longer a core part of their parent company’s operations and, as a result, have potentially underperformed.

The company’s extensive tally of acquisitions is testament to the fact that Ratcliffe is always on the hunt, but these are just the deals it has completed. INEOS casts a wide net and much of Ratcliffe’s M&A success is down to priding himself on knowing when to walk away from a deal.

Unlike its publicly traded counterparts, INEOS is a private company and, as such, funds its acquisitions through debt financing. While this has created issues (particularly during the global financial crisis), it has also provided Ratcliffe with an agility in the market and plays into two of key factors of his M&A approach: an acceptance of the necessity of risk in order to reap the greatest rewards; and a long-term focus on growing the assets that he acquires.

The company’s private status also affords it another key advantage: what Professor Sir Andrew Likierman refers to as “two contradictory aspects of speed”. Firstly, the ability for Ratcliffe and his associates to make decisions and move quickly on a deal without having to consult and gain the approval of a host of shareholders; secondly, the scope to be patient and not be forced into deals by the movements of capital markets. This has enabled the company to be a buyer that is both considered and methodical, as well as decisive and fast when required.

Unfashionable assets
Arguably the most important aspect of INEOS’ acquisitive activity has been its focus on what Ratcliffe calls “unfashionable, unsexy” assets. Focusing on acquisitions that other companies might not consider and that sellers are maybe looking to offload in favour of more conventionally attractive ventures has enabled Ratcliffe to make a significant number of acquisitions at lower prices.

This focus on unfashionable assets was perhaps most notable during the company’s highly acquisitive early years, when it snapped up a host of commodity chemicals assets, largely in petrochemicals, from bigger players such as BP and ICI. As Ratcliffe explains, these assets were “generically unpopular” among INEOS’ publicly-listed counterparts, due to their cyclicality and the difficulty analysts had in forecasting reliably positive quarterly results.

This gave such assets the appearance of being unattractive acquisition targets. However, Ratcliffe says, this appearance was deceiving, as commodity chemicals tend to ultimately deliver good returns over the course of a cycle, but perhaps not as rapidly or predictably as oil and gas did during the mid-90s to early-00s.

Ratcliffe explains that this delivered multiple advantages for INEOS. Firstly, enabling the company to acquire assets that would ultimately generate strong returns and help the group grow, whilst simultaneously having a more constrained pool of other potential bidders.

Ratcliffe says: “As a consequence, in the past, transactional prices for these businesses tended to be modest as the buyer spectrum was constrained. And thus it came to pass that for many years we mopped up unfashionable, unsexy, commodity and bulk chemical businesses for attractive, or at the very least fair, prices.”

A focus on acquisitions that are not in vogue continued to pay dividends. As renewable energy sources became more popular during the 2000s and 2010s, the price of oil and gas assets slumped, enabling Ratcliffe to continue picking up cut-price assets, while expanding and diversifying INEOS’s portfolio with acquisitions such as the 2011 takeover of BP’s Air Separation Units (ASUs) in Scotland, the 2015 purchase of DEA Group’s UK North Sea Gas Fields and the 2017 acquisition of Dong Energy’s oil and gas businesses, further strengthening the group’s North Sea portfolio.

Exploring many deals
A deal tally that runs to more than 80 outright acquisitions over the course of less than thirty years shows an extremely high level of acquisitive activity on Ratcliffe’s part. However, these completed deals are likely just a fraction of the potential takeovers that INEOS has considered during its relatively short history.

We’ve mentioned several times before that one of the key facets of a successful, scaled-up acquisition strategy is exploring a wide range of deals. This is an approach that delivers numerous benefits for ambitious dealmakers and it is a core part of why INEOS’ M&A activity has been so much more successful than the average large company.

Writing in 2018, Ratcliffe cited a key lesson he had learned from his pre-INEOS days working in venture capital: “The more deals you look at, the better deals you do”. Looking at as wide a range of deals as possible has given him a perspective on the broader state of the markets INEOS is acquiring in that enables him to identify the best possible deals, tempering some of the inherent risk that comes with a strategy focusing on undervalued, unfashionable and occasionally unpredictable assets.

This broad perspective, and the foresight it can provide, was also surely a key factor in Ratcliffe’s decision to diversify INEOS beyond petrochemicals and into oil and gas when the commodity chemicals market became overpriced.

Perhaps more importantly, however, and a lesson that should be absorbed by dealmakers of any scale, is that this approach also gives Ratcliffe the strength and confidence to walk away from deals when they don’t seem right.

According to Ratcliffe, the main reason for deals failing is that “the buyer wants it too much”. In other words, the buyer has become so fixated on one specific transaction that they have no fallback options should the deal collapse and are in a vulnerable position in which they can be pushed into paying over the odds to complete the acquisition.

Having multiple irons in the fire means that Ratcliffe and co are in a strong negotiating position when it comes to price, with sellers almost certainly aware (given INEOS’ stature) that the company is likely to have numerous other options should it decide the price is too high. It also means the company is able to bow out should their due diligence process uncover anything untoward, without the aborted deal being overly damaging to its strategic goals.

Risk is key
Ratcliffe and INEOS have become renowned for their willingness to incorporate risk in their acquisition strategy and this has been key in helping them to acquire undervalued assets that deliver returns, enter new sectors and, in the group’s earlier days, complete bold deals that have been made possible through a mix of huge ambition and creative deal-structuring.

According to Ratcliffe, the company is able to shoulder such a high degree of risk due to its focus on “rigour”, or, as he defines it: understanding the risks inherent in a deal, weighing them up and then taking a view on whether it is worth pursuing. No doubt, the wide net that Ratcliffe casts when sourcing potential deals is invaluable in this process, weighing up how risky one deal is in comparison to another and whether a deal is too risky, or offers high enough potential rewards to make the risk worthwhile.

Another factor of the INEOS process that makes risk more palatable is the company’s patience in the post-acquisition period. Much of this can be attributed to the company steadfastly remaining a private business. With just three partners at the helm, Ratcliffe can think long-term, rather than being forced by markets and shareholders to focus on the rapid, short-term gains that a deal can deliver.

In his 2018 book The Alchemists, Ratcliffe identifies two acquisitions, Styrolution and INOVYN, that started as “poor deals” but both went on to become among the group’s most successful divisions, approaching $1 billion in profit each. According to Ratcliffe, these successes are “testaments to the philosophy that if you have a problem child, often it can be nursed back to health either by TLC or by creativity, or by simple perseverance.”

The group also takes risks in terms of how it conducts deals, as perhaps best illustrated by its transformative $9 billion takeover of Innovene from BP in 2005. INEOS has become well known for its use of leverage and high levels of debt when making acquisitions and Innovene is the most extreme example, with Ratcliffe saying that INEOS leveraged “the whole of INEOS Group” to complete the acquisition.

The risk inherent in this transaction was intensified due to the conditions under which it was completed, with just two months to carry out due diligence, during which time INEOS was not allowed to meet an executive of the company, or even visit a site. At the time of the sale, BP was simultaneously planning for a public listing of the business and wanted any sale closed before the date the IPO was set to be finalised, whilst also eager to limit knowledge (even among senior figures) that it was considering a private sale.

As Ratcliffe writes: “It became one of the biggest deals done in corporate history at the time, and it was done at breakneck speed. But we always felt we had a handle on the risk.”

The returns on that deal speak for themselves. Innovene, a $25 billion turnover business, quadrupled INEOS’ size overnight and established it as one of the world’s largest chemicals businesses. It remains a key part of the INEOS Group to this day.

Ultimately, Ratcliffe’s attitude towards risk is less a case of embracing it, rather than an acknowledgment that you can never fully eliminate it without getting overly bogged down in analysis – something that would be fatal to the group’s agile M&A operations.

Again, it comes back to balancing risk with rigour. At the early stages of a deal, weigh up all the potential risks you can think of before deciding whether to proceed. During a deal, ensure that the risk undertaken in highly-leveraged transactions are balanced with a rigorous attention to cashflow and financial discipline, to ensure that debt can be managed.

Without this firm and scrupulous approach, Ratcliffe would not be boasting of a success rate of 80 per cent in his deals, nor would INEOS have had the financial strength to continue servicing its high levels of debt and survive the financial crisis.

Strength in diversity
Core to Ratcliffe’s development of INEOS over the years has been his use of acquisitions to diversify the company, a process that has enabled INEOS to become a more resilient, multi-faceted group, with numerous sources of revenue. Initially, of course, the group diversified away from chemicals with the acquisition of oil and gas assets, while, more recently, its aim of achieving net zero by 2050 has seen investments in areas such as carbon storing and hydrogen production. The company has also expanded geographically through acquisitions, moving beyond Europe and into the United States, the Middle East and Asia.

In terms of operational diversification, however, the biggest change has been over recent years, as the group has expanded into a variety of sectors far beyond its traditional base - often into areas Ratcliffe is personally passionate about. Of course, most notable, has been its investments in sports such as Formula One, sailing (America’s Cup), cycling and football, with the acquisitions of Swiss team Lausanne, French side OGC Nice and its recent investment in Manchester United.

The group has also expanded into fashion, with its takeover of iconic British clothing brand Belstaff, and even hospitality, with its acquisition of the Grenadier pub in London from Greene King. The Grenadier also provided the name for INEOS’ venture into the automotive sector, with its Grenadier 4x4, fashioned as a “spiritual successor” to the discontinued Land Rover Defender.

As well as increasing, diversifying and solidifying the group’s revenue streams, these high-profile ventures into more publicised sectors have enabled Ratcliffe to massively increase INEOS’ profile worldwide. The group’s recent acquisition of a 25 per cent stake in Manchester United, arguably the world’s biggest football club, represents the latest step in its journey to becoming a major global name – a long way from the day in 2001 when Dow Chemical’s Bob Learman replied “Who?” when told he would be presenting to a potential bidder called INEOS.

Post-acquisition – Leaner management and value creation
A big part of the success behind most of Ratcliffe’s acquisitions has been the all-important post-deal period, when the group seeks to capitalise on the potential of the newly acquired business. Given Ratcliffe’s focus on undervalued or underperforming assets, there is often significant work to do to ensure that the structure of the business is optimised towards value creation.

A common feature of INEOS’ post-acquisition “makeovers” involves Ratcliffe and the INEOS leadership stripping out unnecessary layers of senior and middle management that may be overly-complicating the business and drawing attention away from its core operations.

The Innovene deal again represents a perfect example of this. At the time of its takeover, the company operated under the typical BP mode: a hierarchical structure, with managers assigned to geographical regions. This is anathema to INEOS’ approach, which emphasises a “vertical” or “federated” structure in which managers understand the whole business from top to bottom.

Ultimately, just one Innovene board member remained on in a CEO position following the takeover. At the same time, Ratcliffe also instituted a new governance system, slashed IT costs, changed the business’ communication structure, financial reporting and financial governance.

This kind of approach may sound dramatic and can certainly cause culture shocks at newly-acquired businesses, but it has proven to be vital in Ratcliffe’s success at building long-term value at his companies. Of course, as with any INEOS venture, all decisions are taken with a view to the long-term, not what is going to drive the best returns for shareholders in the current quarter or financial year, but what is going to position the business to thrive for years to come.

Getting a streamlined, efficient structure in place post-acquisition is also vital to INEOS’ ultimate goal of decentralised management. While the post-deal period may see significant changes, once the business has been made over, Ratcliffe and his associates take a back seat, with a core team from the business’ previous management team continuing to run operations.

With a leaner management system in place, the backing of a major owner focused on long-term success and freedom to run the business the way they see fit, companies owned by INEOS are encouraged to be entrepreneurial and autonomous – an approach that so far seems to have delivered significant dividends for both INEOS and the companies it acquires.

Transformative deals: A rundown of 12 significant INEOS deals
Throughout INEOS’s history, Ratcliffe has undertaken a series of notable M&A deals that have been instrumental in transforming the business from one of many chemical companies, to a global industrial powerhouse with investments in a wide range of sectors.

Here are 12 deals illustrating Ratcliffe’s focus on driving INEOS into new markets, consolidating its existing operations and diversifying its portfolio. Together, they demonstrate Ratcliffe’s skill in identifying undervalued assets and leveraging them to create a robust, diversified conglomerate.

1. Acquisition of Antwerp Site from BP (1998)
INEOS's first major acquisition, this deal marked INEOS's entry into the world of large-scale chemical production. It was a strategic purchase, expanding the company's footprint into mainland Europe.

2. Purchase of Innovene from BP (2005)
INEOS acquired Innovene, BP's olefins, derivatives, and refining subsidiary, for $9 billion. This transformative deal made INEOS the world's fourth-largest chemicals company at the time, significantly increasing its scale and diversity and quadrupling its turnover overnight.

3. Acquisition of Norsk Hydro's Polymers Business (2007)
This acquisition allowed INEOS to expand its presence in the European polymers market, particularly in polyvinyl chloride (PVC) production and significantly strengthened and consolidated its market position.

4. Purchase of BP's Refineries and Petrochemical Complex in Germany (2005)
INEOS again acquired from BP, taking over the company’s refining and petrochemical complex in Lavéra, France, enhancing its refining capacity and expanding its market reach in Europe.

5. Acquisition of BP's Air Separation Units (ASUs) in Scotland (2011)
This deal involved acquiring BP's air separation units in Grangemouth, Scotland. It was a tactical move to secure the supply of industrial gases essential for INEOS's operations as it increasingly focused on areas outside of chemicals.

6. Purchase of DEA Group’s UK North Sea Gas Fields (2015)
INEOS's move into the energy sector was marked by this major acquisition of DEA Group’s UK North Sea gas fields, which signified a significant strategic expansion into upstream energy production.

7. Acquisition of the Forties Pipeline System from BP (2017)
This deal represented a major milestone, as the Forties Pipeline is a key piece of UK energy infrastructure. It demonstrated Ratcliffe’s broader strategic vision of INEOS as a company focused on energy, as well as chemicals.

8. Purchase of Dong Energy’s Oil and Gas Business (2017)
Further expanding into the energy sector, INEOS acquired the oil and gas business of Dong Energy, further strengthening its position in the North Sea and diversifying its portfolio.

9. Acquisition of Ashland’s Composites Business (2018)
This purchase allowed INEOS to diversify into new markets with high-performance composites that are widely used in industries such as automotive and construction.

10. Purchase of Cristal’s North American Titanium Dioxide Business (2019)
This acquisition was a strategic move into the production of titanium dioxide, a key pigment in the paint and coatings industry. Further evidence of Ineos’ growing focus on moving into new areas and markets.

11. Acquisition of BP’s Aromatics and Acetyls Business (2020)
This deal was a major strategic expansion in the aromatics sector, key to the production of fibers, films, and packaging.

12. Acquisition of Sasol’s 50% Stake in Gemini HDPE (2020)
By acquiring Sasol’s share in Gemini HDPE, INEOS strengthened its position in the North American high-density polyethylene market, a vital material in numerous consumer goods.

INEOS’ acquisitive strategy is vast and multifaceted and clearly illustrates the activity of a major global conglomerate. But, at its core, Ratcliffe’s approach reflects qualities that dealmakers of any scale can learn from.

Ratcliffe is a bold operator who is more than prepared to take risks for a deal that he feels can strengthen the group and help it move forward. But behind this relatively buccaneering appearance is a highly thought-out strategy that balances risk with a forensic focus on creating value, rigorous due diligence and an almost obsessive interest in hunting out the best deals, even if that means walking away from a major acquisition.

At a time when M&A offers the fastest route to growth for ambitious businesses, these lessons can be invaluable for owners seeking to make the right acquisitions to help their enterprises succeed.

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