Elliott is seeking to break Phillips 66 up after potentially gaining four board seats following May 21 votes, attempting to sell or spin off the oil refiner’s pipeline, terminals, and petrochemicals businesses. Phillips 66 already had expressed a willingness to divest its European retail businesses last year, including its prior sale last fall of its Switzerland and Liechtenstein business.

Phillips 66 is selling 65% stakes in the Germany and Austria businesses to a consortium led by Energy Equation Partners and Stonepeak that will bring in $1.6 billion in pre-tax cash proceeds, giving the businesses a total enterprise value of $2.8 billion. The deal includes 970 retail fueling sites, of which 843 are JET-branded stores.

Phillips 66 said the proceeds will go toward debt reduction and shareholder returns.

“This transaction advances our strategy to optimize our portfolio and enhances long-term shareholder value,” said Mark Lashier, Phillips 66 chairman and CEO, in a statement. “The newly formed joint venture allows us to monetize this non-core asset while retaining the ability to benefit from its future growth.”

The ongoing proxy fight that comes to a head next week pits one of the energy sector’s most storied players, against arguably the most influential activist fund manager in the world, led by billionaire Paul Singer.

Elliott owns a nearly 6% stake in Phillips 66 and is pushing for major change, arguing that Phillips 66 has performed below peers such as Marathon Petroleum and Valero Energy, and that Phillips 66 needs to focus on its core oil refining business instead of continuing to grow its midstream pipeline and terminals businesses. Likewise, Chevron has expressed an interest in buying out Phillips 66’s stake in its Chevron Phillips Chemical joint venture.

That runs counter to Phillips 66’s strategy of late to grow its midstream pipeline business, especially in natural gas liquids (NGLs), such as propane, butane, and ethane—the primary petrochemical feedstock, which Phillips 66 sees as its largest growth potential.

Elliott notched wins earlier this week when prominent proxy advisory firms Institutional Shareholder Services (ISS), Glass Lewis, and Egan-Jones all sided with Elliott’s proposed board changes in the proxy fight, arguing that Phillips 66 has regularly fallen short of market expectations in recent years.

Elliott said in a prepared statement that “ISS cited Phillips 66’s disappointing operating performance, poor corporate governance, and ‘track record of providing selective and ambiguous disclosure’ as reasons to support Elliott’s ‘strong slate.’ With all three proxy advisory firms having endorsed Elliott’s case, it is clearer than ever that urgent and meaningful change is needed in the Phillips 66 boardroom.” 

Elliott also is pushing for a non-executive chair to lead the board.

Phillips 66 countered that it disagrees with the proxy advisory firms’ decisions, contending that they failed to properly examine Elliott’s thesis for breaking up the company, and that they relied on outdated information and analyses.

Lashier said Phillips 66 is in the early days of its transformation strategy and that it is producing stronger results of late.

“Elliott is seeking rapid, irreversible change in pursuit of a short-term thesis that would introduce significant risks to Phillips 66 shareholders,” Phillips 66 said in a statement. “Do not let Elliott’s short-term and misinformed thesis disrupt your consistent and compelling returns.”