There's still a chance that one of the biggest deals in the history of the plastics industry will come to fruition. Indian petrochemical giant Reliance Industries Ltd. is widely reported to have sweetened its offer for LyondellBasell Industries AF SCA to $14.5 billion.
Reliance had first made an undisclosed offer for Rotterdam, the Netherlands-based LyondellBasell on Nov. 21. That bid was reported to be around $13.5 billion, and would have been for a controlling stake.
The new offer would give Reliance a minority stake, but would give the firm super-voting power to control Lyondell's board, according to a report in The Wall Street Journal.
The new bid would give LyondellBasell creditors the option to take either cash or equity in the company, according to reports that quote sources close to the deal. LyondellBasell, the world's largest polyolefins maker, had filed for protection from creditors in U.S. Bankruptcy Court in New York in January 2009. The company has been working toward a reorganization plan.
In a Feb. 25 phone interview, LyondellBasell spokesman David Harpole would not comment on Reliance, but said any alternative to his firm's reorganization plan, to be filed March 1 in bankruptcy court, would have to maximize value for our creditors while improving the financial stability of the reorganized company.
We have a fiduciary duty to look at plans that are in the best interest of our estate, he said.
Reliance officials could not be reached for comment.
The rumored deal-making has drawn interest from the global petrochemical community, partly because of a possible power shift from the Western to Eastern Hemisphere.
Reliance is driving the show here, said petrochemicals industry veteran Earl Armstrong. They've obviously demonstrated interest before in wanting to move outside of India and become a world-scale player.
In the bankruptcy proceedings, they're valuing LyondellBasell right there at close to the amount of the [Reliance] bid, added Armstrong, who's president of the DeWitt & Co. consulting firm in Houston.
On Feb. 16, LyondellBasell announced that it had reached an agreement that would pave the way for the company to emerge from Chapter 11. That deal resolved objections to the company's reorganization plan by the company's unsecured creditors by giving the creditors an equity stake in the new company.
In spite of its recent financial struggles, LyondellBasell remains an attractive property, according to Armstrong.
If the $14.5 billion deal with Mumbai-based Reliance goes through, it would be one of the largest in the history of the global plastics industry. Some other major deals include:
* Newell Co. paid about $5.8 billion to buy Rubbermaid Inc. in 1999.
* In 2000, Dow Chemical Co. bought Union Carbide Corp. for $11.6 billion.
* Ineos Group bought the polyolefins and olefins business of British Petroleum plc for $9 billion cash in 2005.
* Saudi Basic Industries Corp. paid General Electric Co. $11.6 billion for GE Plastics in 2007.
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