LyondellBasell valued Braskem at real (R) 41.5bn ($11.4bn) in a bid it made to acquire the Brazilian polyolefins producer, according to a news report published on Thursday.
US-listed shares of Braskem rose by 5.20% following the news.
LyondellBasell presented the proposal to Brazilian construction company Odebrecht, which owns a 50.1% voting stake in Braskem, according to the financial newspaper Valor Economico.
The proposal needs to be approved by Brazilian state energy producer Petrobras, the other major shareholder of Braskem, according to Valor.
The offer represents a 12% premium over Braskem’s B3 shares on the Brazilian stock exchange, Valor said.
In a statement, Odebrecht said it has not received a proposal to acquire its stake in Braskem. The company continues to work on alternatives to create value for the company and its shareholders.
Odebrecht also reaffirmed its intention to maintain its participation in the petrochemical sector.
LyondellBasell said on Thursday it does not comment about market speculation. Braskem said it will not comment. Petrobras did not immediately respond to a request for comment.
Earlier in October, the Wall Street Journal reported that LyondellBasell had made a takeover approach to Braskem.
At the time, an analyst made the case why such a deal would make sense. Braskem met the acquisition criteria laid out by LyondellBasell during its April 2017 analyst day. That target would need to be a low-cost producer of commodity chemicals with a similar portfolio. In addition, the acquisition would have to be accretive to earnings/share within two years.
The acquisition would extend LyondellBasell’s footprint in Brazil and further extend its share in the polypropylene (PP) market in the US and Europe. Braskem is also active in Mexico through its controlling stake in the joint venture Braskem Idesa, which produces polyethylene (PE) at the country’s Ethylene XXI complex.
However, it is unclear how the Brazilian government would view the foreign takeover of its national polymers champion. Braskem is the sole producer of PP and PE in the country.
If LyondellBasell does pursue Braskem, it would mark the company’s second major acquisition.
The company is expected to close on its $2.25bn purchase of plastics compounder A Schulman later this year. ($1 = R3.64)
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