LYONDELLBASELL
Talks to acquire Braskem ended / Plans to expedite share repurchase programme
 LyondellBasell CEO Bob Patel will not be seeing the Braskem acquisition come to fruition (Photo: LyondellBasell) |
LyondellBasell (LYB, Houston, Texas / USA; www.lyondellbasell.com) has terminated talks relating to its proposed takeover of Brazilian petrochemicals group Braskem (São Paulo; www.braskem.com.br).
Commenting on the decision, LyondellBasell CEO Bob Patel said, “The combination of LyondellBasell and Braskem is compelling because of the companies' complementary strengths, product portfolios and operational footprints. However, after careful consideration, we jointly decided not to pursue the transaction.” Patel did not elaborate further on why it had called off negotiations with parent company Odebrecht (Salvador / Brazil; www.odebrecht.com).
The combined group would have had pro forma sales of just over USD 46 bn (EUR 41 bn) before any divestments that might have been required and given LyondellBasell a foothold in South America. It would also have created the largest polyolefins producer in the world, with approximate capacities of 10m t/y each of polyethylene and polypropylene, according to Plasteurope.com’s Polyglobe database (www.polyglobe.net).
However, discussions have been fraught with delays since news of the proposed merger surfaced in October 2017. LyondellBasell did not actually confirm talks were taking place until June 2018 – see Plasteurope.com of 20.06.2018.
More recently in March 2019, news agency Reuters said the deal would be delayed by at least a few months following Braskem’s failure to file its 2017 “20-F” report with the US Securities and Exchange Commission along with a delay in securing a long-term supply deal for naphtha feedstock with Petrobras (Rio de Janeiro / Brazil; www.petrobras.com.br), Braskem’s minority shareholder – see Plasteurope.com of 26.03.2019. LyondellBasell had made the 20-F documents a prerequisite for the acquisition. In May 2019, the New York Stock Exchange suspended Braskem’s US-listed shares because of its failure to file the documents by the 16 May deadline.
In addition, throughout the discussion process, Petrobras, which said it had “preferred rights” to buy Odebrecht’s share in Braskem, kept the other parties in the dark about its interest in selling its stake or buying more shares.
Patel said LyondellBasell now intends to expedite its share repurchase programme, which currently allows for it to buy back up to 37m outstanding shares. He commented, “Our strong cash flows, ample liquidity, and healthy balance sheet allow us to deliver a growing, top-quartile dividend, advance organic growth, and maintain optionality for M&A opportunities while executing these significant opportunistic share repurchases.”
Braskem has not commented on its reasons for withdrawing from a merger with LyondellBasell.
The Brazilian petrochemicals group as well as Odebrecht and Petrobras were also embroiled in Brazil’s “car wash” corruption scandal, which erupted in 2014. Braskem was ordered to pay fines of close to USD 1 bn – see Plasteurope.com of 02.01.2017.
Commenting on the decision, LyondellBasell CEO Bob Patel said, “The combination of LyondellBasell and Braskem is compelling because of the companies' complementary strengths, product portfolios and operational footprints. However, after careful consideration, we jointly decided not to pursue the transaction.” Patel did not elaborate further on why it had called off negotiations with parent company Odebrecht (Salvador / Brazil; www.odebrecht.com).
The combined group would have had pro forma sales of just over USD 46 bn (EUR 41 bn) before any divestments that might have been required and given LyondellBasell a foothold in South America. It would also have created the largest polyolefins producer in the world, with approximate capacities of 10m t/y each of polyethylene and polypropylene, according to Plasteurope.com’s Polyglobe database (www.polyglobe.net).
However, discussions have been fraught with delays since news of the proposed merger surfaced in October 2017. LyondellBasell did not actually confirm talks were taking place until June 2018 – see Plasteurope.com of 20.06.2018.
More recently in March 2019, news agency Reuters said the deal would be delayed by at least a few months following Braskem’s failure to file its 2017 “20-F” report with the US Securities and Exchange Commission along with a delay in securing a long-term supply deal for naphtha feedstock with Petrobras (Rio de Janeiro / Brazil; www.petrobras.com.br), Braskem’s minority shareholder – see Plasteurope.com of 26.03.2019. LyondellBasell had made the 20-F documents a prerequisite for the acquisition. In May 2019, the New York Stock Exchange suspended Braskem’s US-listed shares because of its failure to file the documents by the 16 May deadline.
In addition, throughout the discussion process, Petrobras, which said it had “preferred rights” to buy Odebrecht’s share in Braskem, kept the other parties in the dark about its interest in selling its stake or buying more shares.
Patel said LyondellBasell now intends to expedite its share repurchase programme, which currently allows for it to buy back up to 37m outstanding shares. He commented, “Our strong cash flows, ample liquidity, and healthy balance sheet allow us to deliver a growing, top-quartile dividend, advance organic growth, and maintain optionality for M&A opportunities while executing these significant opportunistic share repurchases.”
Braskem has not commented on its reasons for withdrawing from a merger with LyondellBasell.
The Brazilian petrochemicals group as well as Odebrecht and Petrobras were also embroiled in Brazil’s “car wash” corruption scandal, which erupted in 2014. Braskem was ordered to pay fines of close to USD 1 bn – see Plasteurope.com of 02.01.2017.
05.06.2019 Plasteurope.com [242653-0]
Published on 05.06.2019
German version of this article...