LyondellBasell Industries NV (LYB.N) and Odebrecht SA, the controlling owner of petrochemicals producer Braskem, said on Friday they have entered into exclusive talks for Lyondell to acquire control of Braskem, and two people familiar with the matter said the companies are planning a cash and shares deal that could top $9 billion.
LyondellBasell and Odebrecht expect to reach a final deal in two months, but there is no deadline yet for LyondellBasell to deliver a binding proposal, the sources said, speaking on condition of anonymity because they are not authorized to discuss the terms publicly.
The sources said Odebrecht expects a premium over Braskem’s market capitalization, which was 33.2 billion reais ($8.93 billion) as of Thursday’s market close.
Once LyondellBasell and Odebrecht reach an agreement on price, the acquirer will extend the same terms for the stake owned by state-controlled oil company Petroleo Brasileiro SA (PETR4.SA), known as Petrobras, Braskem’s No. 2 shareholder, according to the sources.
Petrobras previously said it planned to divest fully from its stake in Braskem.
While Odebrecht is angling for a minority stake in LyondellBasell, the deal may be structured so that Petrobras may receive an all-cash offer if it wishes to, the sources said, adding that minority shareholders will also receive a tender offer.
Braskem shares soared 19 percent in Sao Paulo, lifting its market cap to 37.7 billion reais.
LyondellBasell edged nearly 1 percent higher in New York, while Petrobras shares were down nearly 3 percent, tracking tumbling crude prices.
LyondellBasell and privately held Odebrecht declined to comment on details of the deal. Petrobras said in a filing it had been informed of talks.
Most of LyondellBasell’s 55 plants are in the United States, Europe and Asia — a footprint complementary to that of Braskem, which has 29 plants in Brazil, five in the United States, four in Mexico and two in Germany.
“The discussions are preliminary and no agreements have been reached,” the two companies said. “There can be no assurance the discussions will result in a transaction or on what terms any transaction may occur.”
During the exclusive negotiations, LyondellBasell will examine Braskem’s long-term naphtha supply contract with Petrobras, which is set to expire in 2020.
Odebrecht recently pledged its 38 percent stake in Braskem as collateral on loans, and part of the proceeds from a deal may go to paying debt, so the conglomerate’s creditors will have to agree to the sale, the sources said.
Source: Reuters.com