As expected, Reliance Industries Ltd.'s $14.5 billion bid to buy LyondellBasell Industries AF SCA has been rejected.
LyondellBasell disclosed the decision in a March 8 filing in U.S. Bankruptcy Court in New York, where the company is pursuing a reorganization plan.
According to an updated reorganization plan filed with the court, Rotterdam, Netherlands-based LyondellBasell will exit bankruptcy April 30.
The reorganization plan gives new details about the now-scuttled proposal from Mumbai, India-based Reliance. According to the court filing, Reliance had three months to undertake an extensive due-diligence review of LyondellBasell's operations, following Reliance's Nov. 14 non-binding offer for the firm.
That review included LyondellBasell and its advisers making full teams available to guide visits to more than 20 of its key plants worldwide; three days of face-to-face presentations and question and answer sessions with management; two days of due-diligence sessions with Reliance's proposed funding banks; and many other meetings and phone calls with Reliance and its advisers, the filing said.
Hundreds and Reliance's advisers and personnel were given access to thousands of LyondellBasell documents, it said.
Reliance, after reviewing LyondellBasell's operations, submitted another non-binding proposal Dec. 18. But Lyondell- Basell's debtors encouraged Reliance to better the proposal and they encouraged large creditors to meet with Reliance.
On Feb. 7, the debtors requested in writing that Reliance give its final and best proposal by Feb. 19, and two days later the firm delivered a non-binding offer reported to be for $14.5 billion. LyondellBasell's debtors rejected it, citing a number of concerns:
* Reliance's insistence on having effective governance and shareholder control, even if it owned a minority of LyondellBasell's equity.
* The dilutive effect of the purchase price associated with the proposed direct equity investment by Reliance.
* The potential for delay and associated costs that would be involved with pursuing a bid from Reliance.
* The lack of any mechanism to defray the risks of delay.
* Reliance's dependence on speculative and disputed future profit opportunities, which it argued would represent an opportunity for increased value if the debtors accepted the plan.
After the debtors' management board and independent supervisory board members analyzed the most recent Reliance proposal, the debtors concluded that it is not higher and better than the [company's reorganization] plan, and thus it does not warrant deviating from the plan and assuming associated execution risk, LyondellBasell said in the court filing.
Now that LyondellBasell has officially rejected Reliance's offer a proposal that would have been one of the largest buyouts in the history of the plastics industry speculation again turned to whether Reliance will continue to try to find a deal that will give it a bigger global footprint.
A source at Reliance told global news Agence France-Presse: Lyondell made it clear that they were not interested in our bid. It is time to look ahead for other global acquisitions. We will consider all options.
This is not the first time that Reliance has unsuccessfully pursued a big plastics-related acquisition. In 2006-07, the company reportedly was interested in buying GE Plastics but Reliance lost out to Saudi Basic Industries Corp. of Riyadh, Saudi Arabia.
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