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Mergers & Acquisitions

LyondellBasell dawdles on Braskem acquisition

Petrochemical maker says it would still benefit from merger with its Brazilian rival

by Alex Tullo
February 6, 2019 | A version of this story appeared in Volume 97, Issue 6

A photo of a plant in Brazil where Braskem makes polyethylene from ethanol.
Credit: Braskem/Mathias Cramer
Both Braskem and LyondellBasell have large polyethylene businesses.

Despite long delays, LyondellBasell Industries says it continues to pursue the possible purchase of a controlling stake in Brazilian petrochemical maker Braskem.

Lyondell announced last June that it was in discussions to buy the stake from Odebrecht, a Brazilian conglomerate that owns a 50.1% interest in Braskem. Subsequently, Brazil elected a new president, right wing populist Jair Bolsonaro, who is revamping the Brazilian government. The revamp includes the state-owned oil company Petrobras, which owns most of the rest of Braskem.

Financial analysts quizzed Lyondell CEO Bob Patel about the potential combination during a conference call on Feb. 1. “Is there a point where you need to make a decision either way and just move forward, as it has been, sorry to say, dragging on for quite a while here?” asked David Begleiter of Deutsche Bank.

“Part of the protracted timeline has been the pause because of the change in the government,” Patel answered.

During the call, Patel reiterated his belief that Braskem’s strong position in Brazilian petrochemicals would be a strategic addition for his company. Lyondell had $39 billion in sales in 2018. Braskem—a similar company that also makes basic petrochemicals, polyethylene, and polypropylene—generated $15 billion in sales in 2017.

“The outlook for Brazil continues to improve, and the expectations are positive under the new government,” Patel said. He added that Lyondell has the financial flexibility to pursue a deal even after purchasing polymer compounder A. Schulman for $2.3 billion and spending $3.4 billion on dividends and share buybacks last year.

Jorge O. Bühler-Vidal, director of Polyolefins Consulting, says Brazil’s new president could be open to Petrobras also participating in the deal, given that he has been friendly to privatization. “Petrobras wants to concentrate on oil exploration and is selling off refineries and pipelines,” he says. “Selling its share in Braskem is consistent with that objective.”


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