Braskem and Novonor Confirm Private Equity Bids

11.05.2023 - Braskem and its controlling shareholder Novonor (formerly known as Odebrecht) have now confirmed a takeover offer from private equity investors Apollo and Abu Dhabi National Oil Company (ADNOC) for Novonor’s shares in the Brazilian petrochemicals and plastics producer.

Last week, Novonor confirmed it had received an offer for the shares but declined to say where it came from or how much it was worth. Novonor currently owns a 38.3% stake in Braskem and state-owned energy giant Petrobras 36.1%. The remaining 25.6% is held by smaller investors.

In a securities report seen by the Reuters news agency, Novonor said the bid for Braskem was worth 47.00 reais ($9.39) per share, with 20.00 reais to be paid in cash and 20.00 through perpetual debentures at an annual rate of 4%. The other 7.00 reais would be paid via warrants.

According to reports, the bid is a premium of 140% over the closing price on May 4, the day before rumors of the potential deal surfaced in Brazilian media. Novonor is said to be evaluating the offer, in consultation with Petrobras.

Rumors that the two major shareholders were looking to exit Braskem have been circulating for several years. In 2021, Bloomberg sources said an option considered in 2019, which called for the two principal owners  to launch a coordinated public share sale and divest their stakes gradually on the market, was back on the table.

The IPO option was thought to present some complications, however, as the Novonor-Petrobras shareholder pact would need to be overhauled, among other considerations. An alternative was to break up Braskem.

At the time, commentators said a sale could provide a way out of the morass for the former Odebrecht, as it struggled to pay fines racked up in Brazil’s wide-reaching Carwash corruption scandal.

Novonor is seen to be still drowning in debt.  As collateral for the loans the top Braskem shareholder received from Brazilian banks, the construction conglomerate pledged shares in the chemical producer.  It thus cannot sell them without the approval of creditors.

Author: Dede Williams, Freelance Journalist