Mumbai, Nov. 21: Reliance Industries has bid for bankrupt petrochemicals major LyondellBasell.
Both companies issued statements confirming a preliminary non-binding cash offer to acquire a controlling interest in the worlds third largest independent chemical maker. The two, however, did not put a value to the cash offered by Reliance.
Industry sources, however, said the bid was the biggest ever made by an Indian firm overseas. The largest acquisition was when Tata acquired Corus for about $12 billion. I can say for sure that Reliance has offered more than that, an industry source said.
This offer (from Reliance) 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 filed by the company, LyondellBasell said in a statement.
An yet-to-be identified private equity fund had previously made an offer to acquire the petrochemical giant, which had in January filed for Chapter 11 bankruptcy protection under the US law.
The Rotterdam-headquartered group took on billions of dollars in debt a year earlier when billionaire Len Blavatnik led a $12.7-billion leveraged buyout of US company Lyondell by Basell of the Netherlands. It has assets that could be worth $6 billion and the successful bidder would be decided by the US bankruptcy court. It may take a few months for the deal to conclude.
The offer is preliminary and subject to customary conditions, including conduct of due diligence, documentation and receipt of sufficient creditor support, Reliance said.
LyondellBasell is privately owned by ProChemie GmbH, a joint venture of Access Industries and ProChemie Holding.
It said its management would work with all parties to design an approach that maximises value for the companys creditors through the pursuit of a plan of reorganisation and enhances the financial strength of the reorganised company.
Reliance is reviewing a number of global opportunities for growth, the Mukesh Ambani flagship said. This review is ongoing and there can be no assurance of the outcome, including with respect to LyondellBasell.
Last year, LyondellBasell earned $50.7 billion in revenues and employed 15,000 people across 19 countries.
Reliance is the worlds biggest producer of polyester yarn and fibre and is one of the top 10 producers of leading petrochemical products.
At its annual general meeting last Tuesday, chairman Mukesh Ambani had announced his intentions to scout for buyouts irrespective of geography.
Over the past few weeks, the buzz about RIL making a big acquisition overseas had got louder. RIL was reportedly in talks with US bankruptcy courts for buying a stake in LyondellBasell.