Materials giant LyondellBasell Industries grabbed first-half headlines in plastics materials M&A for deals still in process.
LBI got the ball rolling in February when it announced its acquisition of global compounding and concentrates leader A. Schulman Inc. for $2.25 billion. Based in Houston and London, LBI is one of the world's largest producers of olefins and polyolefins, including polypropylene and polyethylene resins. Fairlawn, Ohio-based Schulman also ranks as one of Europe's largest resin distributors.
The transaction will create an industry-leading compounding business with combined sales of $4.6 billion and adjusted EBITDA of $446 million over the last 12 months. The deal will add Schulman's $2.5 billion in annual revenue, 54 manufacturing sites and 2.4 billion pounds of production capacity to LBI's own PP compounding unit, which has $2.1 billion in annual sales, 18 manufacturing sites and 2.5 billion pounds of production capacity.
The LBI-Schulman deal has been approved by Schulman shareholders but still needs regulatory approval before being finalized.
LBI followed up in June by confirming that it's 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, saying that they "have entered into exclusive discussions regarding a potential transaction between LyondellBasell and Braskem."
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."
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 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.