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Mumbai: LyondellBasell Industries, among the world’s largest polymers, petrochemicals & fuels companies, said it has received a preliminary non-binding offer from Reliance Industries Ltd (RIL) to acquire for cash a controlling interest in the company.
“This offer is in addition to the previous non-binding equity financing proposals received by the company and represents a potential alternative to the initial plan of reorganisation previously filed by the company,” LyondellBasell said in a statement.
The bankrupt LyondellBasell did not disclose the size of the offer, but analysts say RIL could pull off an acquisition of $10 billion-plus, since it holds $4 billion in treasury stock and has the potential to borrow another $10 billion.
Headquartered in the Netherlands, LyondellBasell has combined annual revenues of $50.7 billion (over Rs 2.3 lakh crore) for FY2008 and more than 15,000 employees worldwide. The company is privately owned by ProChemie GmbH, a joint venture of Access Industries and ProChemie Holding Ltd. RIL, in contrast, had posted consolidated audited revenues of Rs 1,43,907 crore for FY 2008-09.
At RIL’s AGM earlier this week, chairman Mukesh Ambani had hinted at scaling up its current businesses and acquiring new ones. LyondellBasell said its management will work with all parties “to design an approach that maximises value for the company’s creditors through the pursuit of a confirmable plan of reorganisation and enhances the financial strength of the reorganised company.”
RIL, which is eyeing multi-fold growth and a more wide-spread global footprint, is targeting US oil refining and marketing companies for acquisition. According to a recent Macquaire Research report, the company is also eyeing the likes of Tesoro Corporation, Delek Energy, Sunoco Inc and Valero Energy Corp for possible acquisition. The timing of the proposed acquisition by RIL is crucial, as weak demand, coupled with increased capacity, have plunged the company’s gross refining margins to $1.3 a barrel, well below the average operating cost of most refineries.
Analysts say that RIL is well positioned for a buy in the US at the moment. The company has commissioned its 580 kbpd high-end refinery earlier in the year and hence, requires a large discerning consumer base. ‘Given its larger share of Euro IV/V-compliant gasoline in the product state, the US would be the natural market for the new refinery. Given the unattractiveness of the domestic retail fuel market, superior quality of products and its larger production capacity, RIL will benefit from...
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