Issue Date: August 31, 2009
The two largest chemical makers in Brazil—Braskem and Quattor—have acknowledged that they are in talks on a strategic alliance. The news has raised the specter that the two firms might be mulling a merger that would create a near-monopoly in the country in basic petrochemicals and polyolefins.
Braskem, the country’s largest chemical maker; Unipar, the Brazilian conglomerate that controls Quattor, the number-two chemical maker; and Petrobras, Brazil’s national oil company, which holds a 30% stake in Braskem and a 40% interest in Quattor, admitted that negotiations were under way after an article appeared in the Brazilian magazine Exame. According to the article, Petrobras is considering more investment in Quattor to dilute Unipar’s interest and would then merge it with Braskem.
Braskem, Petrobras, and Unipar put out similar statements playing down the nature of the talks, maintaining that the discussion is about a possible “strategic business alliance.” Unipar, however, indicated that it “continually evaluates possibilities to improve its business and its capital structure.”
Braskem had $9.8 billion in revenues last year, making it the largest chemical producer in Brazil. Quattor reported about $4.9 billion in sales for the same period.
Between them, the two companies operate all of the four ethylene cracker complexes in Brazil. Aside from one small Solvay polyethylene plant, all of the polyethylene and polypropylene production in that country are in the companies’ control.
Tereza Mello, a stock analyst with Citigroup, says the combination might arouse regulators. Although the antitrust commission in Brazil “has ruled that the relevant market for the petrochemical industry was the global one, given the large size of the combined companies, new questions would arise,” she wrote in a note to clients.
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