Buzz over counter-bid for Lyondell

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Mumbai: China Petroleum and Chemical Corp, considered the biggest oil refiner in China, and US buyout firm TPG have weighed a bid for bankrupt chemicals company LyondellBasell Industries that could challenge Reliance Industries Ltd's (RIL) offer of about $12 billion, say international media reports. However, according to another news agency, these companies are not considering a bid to buy LyondellBasell Industries.

“That is completely incorrect," said the source in the Reuters report, commenting on a Bloomberg report that the oil refiner and the US private equity firm were weighing a bid for LyondellBasell. A spokesman for Sinopec, the publicly listed unit of China Petroleum, denied in the report that his company was considering such a bid. It was not immediately clear whether the report referred to publicly listed Sinopec or its state-owned parent. An RIL spokesperson in Mumbai said the company does not want to make any comments on the development.

Meanwhile, a buyer would gain US chemical assets that use natural gas as a raw material, which is cheaper than the oil-based ingredients mainly used in Europe and Asia, say analysts. However, RIL did not comment on the counter-bid by other international firms.

As per a Bloomberg report, China Petroleum and Chemical Corp and TPG had considered a bid for LyondellBasell Industries that could rival the Reliance offer of about $12 billion. Citing two people familiar with the matter, the Bloomberg report said Sinopec and TPG reviewed LyondellBasell's finances and discussed making a joint bid.

RIL has made a cash offer for Lyondell over the weekend, which sources said was worth $10 billion to $12 billion. Since filing for bankruptcy protection last January, LyondellBasell has been working to reorganise its operations and assuage unsecured creditors, who are suing banks and other creditors who put together the company's 2007 leveraged buy-out in a trial slated to start next month.

Meanwhile, RIL's bid for LyondellBasell, if successful, could mark India Inc's highest buy-out that could be $12 billion as per media reports. RIL, if it wins the bid, would gain by getting to increase its limited global presence, say industry experts.

Currently, RIL has trading desks in Singapore, Rotterdam and Dubai but little distribution presence. Also, RIL would via the deal, gain manufacturing edge by having several facilities. RIL currently has most of its 14 facilities concentrated in Maharashtra and Gujarat, while LB has 50 manufacturing facilities in 19 countries.