The board of the bankrupt Dutch petrochemicals company, LyondellBasell Industries AF, has rejected a $14.5-billion bid from Reliance Industries Ltd (RIL), reports said on Tuesday. An RIL spokesperson said the company is yet to receive any formal intimation on this, but the reports quelled concerns that the Indian company would overpay for the troubled Lyondell. RIL shares spurted to Rs 999 on the BSE on Tuesday, before ending the day at Rs 986.65, a marginally increase compared to the close on Friday.
Last week, the company?s shares had dipped on the bourses immediately after it sweetened its bid for Lyondell from $12 billion to $14.5 billion. Lyondell is expected to file a reorganisation plan in the US bankrupcy court in Manhattan. The RIL offer was pitted against creditors including Apollo Management LP, a New York-based private-equity firm led by Leon Black, which had backed an earlier reorganisation plan that would have give them an equity stake in the chemicals maker.
?It doesn?t mean this is the end. There?s an opportunity to counteroffer, but the upside value for shareholders is rapidly reduced,? said Neil Beveridge, a Hong Kong-based analyst at Sanford C Bernstein Ltd. ?LyondellBasell was an opportunistic move to buy a distressed asset at an attractive price. Bidding higher removes the rationale for doing this,? he said.
Reliance may also focus on the possible acquisition of Canada?s Value Creation Inc should its bid for LyondellBasell fail.
?There is no significant development in the Canadian deal yet,? sources at RIL aid. The company had bid $2 billion to acquire 65% of Value Creation with oil-sands assets.
Lyondell, the Rotterdam-based chemicals maker, had earlier rejected a revised Reliance bid that valued it at $13.5 billion. India?s largest company by market value had raised its offer for a controlling stake to $14.5 billion, two people with knowledge of the offer had said on February 22.
Reliance initially offered an undisclosed amount on November 21 and has yet to make public the value of its bid. ?The market seems to think this is a positive because the valuation for LyondellBasell seemed a bit too high for a company coming out of bankruptcy,? said Vinay Nair, a Mumbai-based analyst with Khandwala Securities Ltd, who has a ?reduce? rating on the stock. ?The cash outflow it meant for Reliance was a concern,? he said.