Reliance confirms bid for Dutch chemical maker LyondellBasell

Wednesday, November 25, 2009, 20:48 by Business Editor

Reliance Industries Limited (RIL), the biggest private-sector company in India, has confirmed that it has submitted to LyondellBasell Industries (LBI), a privately owned multinational chemical company based in the Netherlands, a preliminary non-binding offer to buy, in cash, a controlling interest in the latter once it emerges from the Chapter 11 bankruptcy protection.

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LyondellBasell, the Dutch-American company, was owned by Russia-born business magnate Leonard Blavatnik.

The US operations of LyondellBasell had sought bankruptcy protection in January 2009, after being plagued by liquidity problems as well as a weak demand owing to the global economic recession.

LyondellBasell also filed a reorganisation plan in September 2009, aimed at emerging from bankruptcy in early 2010.

Reliance Industries Limited has reportedly offered $12 billion (£7.2 billion) to buy a controlling stake in LyondellBasell.

Access Industries, the holding company of Leonard Blavatnik, may take part in a $2.5-billion rights offering, which would finance LyondellBasell Industries to come out of bankruptcy.

In a press release, Reliance Industries Limited, run by Indian billionaire Mukesh Ambani, said that the offer is preliminary and that it is subject to “customary conditions,” including “conduct of due diligence, documentation and receipt of sufficient creditor support.”

Reliance Industries also revealed that it is “reviewing” a number of “global opportunities” to increase its core business.

This review, the press release added, is now under way, and there is no assurance of the results regarding any of the “opportunities under review,” including in the case of LyondellBasell.

According to analysts, the $12-billion (£7.2 billion) bid by Reliance Industries Limited for LyondellBasell Industries has many obstacles in the way since the bid has to make its way through the bankruptcy court.

If and when it materializes, the deal would create one of the biggest energy and chemicals groups in the world, with around $80 billion in combined annual revenues.

In a statement, LyondellBasell said the bid by Reliance Industries Limited to buy a controlling stake in the chemical manufacturer is one of several non-binding offers received from other firms earlier.

A spokesman of LyondellBasell described the bid by Reliance Industries as “a potential alternative among many bids” and that the offer by Reliance is in addition to the equity non-binding offers received from others.

LyondellBasell was set up in 2007 when Basell International Holdings BV, based in the Netherlands, paid $12.7 billion to buy Lyondell Chemical Company, headquartered in Houston, Texas, the United States.

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