Reliance Industries Ltd (RIL), India’s largest private sector company, has raised its offer for bankrupt Dutch petrochemicals firm LyondellBasell Industries AF to about $14.5 billion, according to two people with knowledge of the offer.
In November, Reliance Industries made a cash offer for Lyondell for a controlling stake reportedly worth $10 billion to $12 billion. The revised bid allows Lyondell creditors to opt for cash or equity, said the people who declined to be identified because the talks are private.
Buying LyondellBasell would create a company with more than $80 billion in revenue and give Reliance chemical plants and two oil refineries in the US and Europe. The chemicals maker had rejected a revised RIL bid that valued it at $13.5 billion, the Wall Street Journal said on Jan. 8.
Recently, Lyondell had said an agreement has been reached with its creditors that will help its emergence from Chapter 11. This was expected to force RIL to sweeten its bid for the firm. The US bankruptcy court will take up a reorganisation plan presented by LB’s management on March 1.
?There are some synergies in taking control of the company and Reliance gets access to some Lyondell markets, but this is about at the top end of what you might want to pay for the company,? said Neil Beveridge, analyst at Sanford C Bernstein.
RIL shares were down marginally on the Bombay Stock Exchange to close at Rs 978.90.
Reliance has gained 55% in the past year, lagging behind the 83% advance of the BSE sensitive index.
David Harpole, a Lyondell spokesman, declined to comment on the revised offer. A spokesman for Reliance in Mumbai also declined to comment.
Reliance had outstanding debt of Rs 70,000 crore ($15 billion) and cash and cash equivalents of Rs 15,960 crore as of Dec. 31, the company said. Reliance has raised about $2 billion selling shares from September, chief financial officer Alok Agarwal said last month.
This year may prove a ?buoyant market? for mergers and acquisitions by oil and gas companies, energy consulting firm Wood Mackenzie Consultants Ltd said on Feb. 12.
Lyondell was formed in a 2007-deal–financed with $22 billion in debt— in which it was bought by Basell AF, a unit of Len Blavatnik?s Access Industries Holdings LLC. Creditors have said the buyout crippled one of the world?s largest polymers, petrochemicals, and fuel companies, causing it to seek bankruptcy.