Plastics and petrochemicals giant LyondellBasell Industries is negotiating to buy a controlling stake in Brazil's Braskem SA in a deal that would create a resin powerhouse throughout the Americas.
LBI and Odebrecht SA, the majority owner of São Paulo-based Braskem, confirmed the negotiations in a June 15 news release. The firms announced that they "have entered into exclusive discussions regarding a potential transaction between LyondellBasell and Braskem."
"Both LyondellBasell and Braskem share a strong culture of operational excellence and legacies of value-creating innovation," officials said. "We believe that the potential combination of LyondellBasell's and Braskem's complementary strengths, product portfolios and operational footprints would create significant value for our shareholders, customers and employees."
They added that Braskem's board of directors and management "have been informed of the existence of these discussions," adding that "the discussions are preliminary and no agreements have been reached."
"There can be no assurance the discussions will result in a transaction or on what terms any transaction may occur, they said. LyondellBasell and Odebrecht SA do not intend to make any further comment unless and until the discussions conclude or are required by applicable law, according to the release.
Rumors of an LBI-Odebrecht deal for Braskem were first reported by the Wall Street Journal in October and were reinforced by Brazil's Valor Economico newspaper in May. The Valor Economico report said LBI had valued all of Braskem at $11.5 billion.
If a deal happens, it would combine two of the largest North American makers of polypropylene resin, and two major global polyethylene suppliers. Braskem opened a new PE and petrochemicals complex through a joint venture in Mexico in 2016 and will open a major new PP line in Texas in 2020. LBI, which has offices in Houston and London, plans to add PE and PP production in North America, including the addition of a 1.1 billion pound capacity HDPE unit in Texas next year.
Odebrecht, a Brazilian conglomerate, owns a 50.1 percent stake in Braskem. Petroleo Brasileiro SA, Brazil's state-owned oil firm, known as Petrobras, holds 47 percent of voting capital in Braskem.
The LBI-Odebrecht statement came a day after shareholders on A. Schulman Inc., a major compounder and concentrates maker based in Fairlawn, Ohio, approved LBI's $2.25 billion bid for the company. That deal still needs foreign regulatory approvals to be completed. The companies expect the deal to close in the third quarter.
LBI employs more than 13,000 worldwide and posted sales of almost $34.5 billion in 2017. Braskem employs almost 8,000 globally and rang up sales of 49.3 Brazilian reals ($14.7 billion) in 2017.
