Odebrecht-Braskem Deal may Take longer

22.03.2019 -

A deal between Brazilian conglomerate Odebrecht and LyondellBasell over a possible sale of Odebrecht’s 38.3% share in compatriot petrochemical producer Braskem to the Texas-managed group may take longer than anticipated.

Quoting “three sources with knowledge of the matter,” the news agency Reuters said issues linked to a delayed US filing and a supply contract were the major stumbling blocks.

As it seeks to untangle itself from the web of Brazil’s wide-sweeping “Car Wash” scandal in which it has been implicated, Odebrecht for some time has been seen as interested in unloading its Braskem stake. Talks with LyondellBasell have been mooted deal for about a year and a half, but were only confirmed by the chemical giant in January last year.

Financial terms of a sale apparently have also not yet been hammered out, as dealing with the scandal’s aftermath has diminished the conglomerate’s cash position.

Reuters’ sources said Odebrecht is still negotiating a price as well as the overall structure of the transaction. Analysts generally expect that a stock transfer could be worth at least $11 billion, though late last year some estimates went as high as $13 billion.

The news agency said another factor is that LyondellBasell’s board is unwilling to agree to a share purchase until Braskem has filed its 2017 20-F annual report with the US Securities & Exchange Commission (SEC). The Brazilian company cannot file, however, until its auditors complete their assessment of its internal controls.

Also hindering a deal, according to reports, is that Braskem has not yet been able to agree a long-term naphtha supply contract with its other major shareholder, Brazilian oil group Petrobras, which owns 36.1%. Petrobras’ new CEO, Roberto Castello Branco, has yet to sign a draft contract left by his predecessor Ivan Monteiro.

After initially hinting it was willing to divest its Braskem stake, Petrobras later suggested it was having a rethink. LyondellBasell is unable to pitch an offer to the oil giant until it has reached agreement with Odebrecht.