Sector News

Braskem: Odebrecht denies receiving offer from LyondellBasell

May 25, 2018
Chemical Value Chain

Odebrecht has denied receiving a proposal from LyondellBasell, to acquire Odebrecht’s controlling stake in Braskem, according to a securities filing issued by Braskem on Thursday.

The filing was issued in response to a report by Brazilian daily, Valor Economico , which states that LyondellBasell has prepared an offer to Odebrecht valuing Braskem at 41.5 billion Brazilian reais ($11.4 billion), citing sources familiar with the matter. “Braskem requested information from its controlling shareholder, Odebrecht, who reported that no proposal was received for its shares in the company and that Odebrecht continues to work on alternatives to add value to Braskem and all of its shareholders, reaffirming its intention to maintain a presence in the petrochemical sector,” Braskem said in a statement.

The offer reportedly represented a R$57/share value that equates as a 23% premium over Wednesday’s close, according Alembic Global Advisors (New York, New York), an equity research firm. The offer would be valid for Petrobras, also a shareholder in Braskem, Alembic adds. According to Valor Economico, Petrobras would receive a part of the payment in cash and the other part in shares. Petrobras has expressed interest in divesting its stake in Braskem as part of its restructuring program. However, the Brazilian government issued a decree in October last year, blocking such a sale.

Odebrecht holds 50.1% of Braskem’s voting shares and Petrobras holds 47%. Odebrecht reaffirmed in February this year, it had no interest in divesting its stake in Braskem, as CW reported.

Viability of a merger
A potential deal between LyondellBasell and Braskem would make a lot of sense not only from a portfolio fit perspective but would also be highly EPS accretive for LyondellBasell from the beginning, according to a to a research note from Alembic Global published in January this year. Market talk of such a deal actually broke late last year in a report from the Wall Street Journal.

“Even if LyondellBasell were to pay R$60/share for Braskem in an entirely debt financed deal, such a transaction would be 16% 2018 EPS accretive ex-synergies for LyondellBasell,” Alembic says.

According to Alembic, the market is misconstruing Braskem, perceiving it to be a Brazil-based, naphtha-biased polyethylene (PE) company. However, the company has almost the same tonnage exposure to polypropylene that it has to PE, the research note says. From a feedstock perspective, Braskem’s exposure is about 60% naphtha and 40% gas, refuting the belief that Braskem is predominantly a naphtha-exposed company, the research firm adds.

By Francinia Protti-Alvarez

Source: Chemical Week

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