LyondellBasell Confirms Braskem Talks
LyondellBasell has confirmed exclusive talks with Braskem‘s controlling shareholder, Odebrecht, about acquiring the Brazilian petrochemicals producer. The companies said a deal “would create significant value.”
Speculation about how much LyondellBasell may be prepared to offer varies widely. Last month, when earlier rumors about talks resurfaced, the price tag was seen at about $11.4 billion. Some reports mentioned a figure as high as $13 billion. The news agency Reuters now quotes sources as saying that in a cash and shares deal, the Brazilian company could be worth more than $9 billion.
Reuters’ sources said Odebrecht expects a premium over Braskem’s market capitalization of 3.2 billion reais ($8.93 billion). The two companies are expected to reach a final deal in about two months, but the sources said there is no deadline yet for LyondellBasell to deliver a binding proposal.
Whatever is agreed between Odebrecht, which owns an estimated 38.3% chunk of Braskem, and the Rotterdam-headquartered chemical group managed from Houston, Texas, is thought likely to be a template for an offer by LyondellBasell to take Petrobras’ 36.1% stake.
Earlier this year, Petrobras and Odebrecht announced plans to consolidate Braskem's stock into a single class of shares as part of a restructuring move that could facilitate a sale.
Some reports said that as Odebrecht hopes to take a minority stake in LyondellBasell, the deal with Petrobras could be structured as an all-cash offer, with smaller shareholders also receiving a tender offer.
Most of LyondellBasell’s 55 production facilities are in the US, Europe and Asia; the takeover of Braskem would give it a foothold in South America. Braskem has 29 plants in Brazil, five in the US, four in Mexico and two in Germany.
Part of the transaction between LyondellBasell and Odebrecht could involve debt transfer.
The Brazilian conglomerate is said to have has pledged all of its stake in Braskem as collateral on loans.
Petrobras is regarded as needing to find divestment opportunities worth $21 billion to pay fines stemming from its involvement in the Operation Car Wash corruption scandal that has swept Brazil. The company recently agreed to pay nearly $3 billion to settle a lawsuit related to the scandal brought by US shareholders.