Brazil’s petrochemical giant Braskem said it received a new non-binding offer from Abu Dhabi National Oil Co. (ADNOC) on Nov. 8 to buy a controlling stake in the firm from Novonor, a Brazilian conglomerate previously known as Odebrecht.
In a news conference announcing Braskem’s financial results, Roberto Bischoff, Braskem’s CEO, said that: "Braskem is ready to trigger a due diligence process as soon as our shareholders ask us to." He added that it is too early to make an analysis of how business dynamics would change were the acquisition to go ahead but added that Braskem’s plants would continue to primarily supply the Brazilian market.
Novonor is Braskem’s main shareholder alongside Brazil’s Petrobas. The state-owned oil company currently owns 36.1 percent of Braskem, with 47 percent of the capital with voting rights. Novonor has 50.1 percent of common shares and 38.3 percent of the company’s total capital.
According to Braskem, ADNOC's bid implies the price of 37.29 Brazilian reals (US$7.60) per share of the company, with an equity value of 10.5 billion reals ($2.14 billion) for Novonor's 38.3 percent stake in the petrochemical producer. Braskem said ADNOC offered to pay the 10.5 billion reals in two parts: 50 percent in cash upon closing of the deal and the other 50 percent via an ADNOC senior equity instrument maturing in seven years with annual interest of 7.25 percent, incorporated into the main payment until the end of the third year and in cash from the fourth year onwards.
Braskem added that following the deal Novonor would be assured a minority stake representing up to 3 percent of the total shares currently issued by Braskem.
“Braskem informs that it will continue to support shareholders Novonor and Petrobras and will keep the market informed of relevant developments, in compliance with applicable legislation,” it said in a statement.
ADNOC had previously presented a joint bid with U.S.-based private equity firm Apollo Global, which left talks this September. Other bidders for Braskem include Brazil's Unipar Carbocloro and J&F.
According to Brazilian media, ADNOC is Petrobras’ preferred bidder, partly because the company is state-owned, which is also welcomed by Brazil’s Workers Party-led government. The government had already signaled that it would not like a strategic asset to move to foreign financial investor’s hands.
The press conference also revealed that Braskem suffered losses of BRL 2.418 million in the third quarter of 2023, as well as earnings before Interest, taxes, depreciation and amortization (EBITDA) of BRL 921 million, 31 percent higher than in the previous three months.
The results in the quarter reflected the impacts of the scenario of lower growth in global demand, which remained at historically low levels, but with an improvement in sales volumes in Brazil, the company said.
The increase in recurring EBITDA was mainly explained by an increase in the volume exported and a higher volume of resin sales in Brazil, and an increase in the volume of PP sales in the United States and Europe.
Braskem’s green ethylene business also grew, reaching a usage rate of 108%, considering the capacity expansion that was completed in the previous quarter due to the implementation of industrial efficiency projects.