RIL sweetens Lyondell offer to $13.5 billion

Mumbai: Reliance Industries Ltd (RIL) has recently sweetened its offer to buy a controlling stake in bankrupt Dutch chemicals firm LyondellBasell Industries, agencies said on Friday. Under the revised offer, Reliance, India’s biggest conglomerate, is boosting the valuation of Lyondell to $13.5 billion, up 12.5%, from $12 billion offered in an initial bid made in November, agencies said, quoting unidentified sources.

By the new proposal, Reliance would buy about $2.2 billion in new stocks and support a separate $2.8 billion rights offering by LyondellBasell (LB) to take the company out of bankruptcy. It would also seek voting control to implement synergies with Reliance even if it only holds a minority stake.

Reliance declined comment on the development. A spokesman from Lyondell also declined to comment on its discussions with Reliance, saying it is bound by a confidentiality agreement.

Earlier on Thursday, the Wall Street Journal reported Reliance had sweetened its offer for LyondellBasell. It also reported that Lyondell’s board had rejected RIL’s revised offer. It saw Lyondell’s valuation at about $15.5 billion, $2 billion more than RIL’s revised offer.

RIL’s initial proposal of $12 billion reportedly included a cash component of about $2 billion. RIL shares closed at Rs 1,101.95 on the Bombay Stock Exchange on Friday, down 0.29%.

Apollo Group Inc, which has an exposure as lender to LB of about $10 billion, had in December submitted a new restructuring plan for the company to a US court, in which it had proposed to convert $18 billion of secured and bridged loans into equity and an additional $2.8 billion as cash. So, for RIL to have any chance of getting a stake in LB, it would have to compete with Apollo’s offer, and therefore, will have to increase its cash offer. Certain reports in December had indeed said that RIL had raised its offer for LB by raising its cash component in the entire acquisition proposal to $5-6 billion from the earlier $2 billion.

The hearing on the reorganisation plan will be on February 10, hence it is a wait-and-watch situation for RIL. Rotterdam, the Netherlands-based LB is $50.7-billion company with more than 50 manufacturing sites in 19 countries and sales in more than 100 countries. It has about 9,600 patents worldwide.