Braskem’s controlling shareholder receives offer for its stake

Novonor says it is evaluating a proposal from an unidentified party to acquire its controlling stake in the Brazilian petrochemical maker Braskem.

The acknowledgment comes just a few days after news reports on May 5 that Novonor received a $7.6 billion offer for the stake from Abu Dhabi National Oil Company (ADNOC) and the private equity firm Apollo Global Management. At the time, Novonor said it hadn’t received any proposals that were material or binding.

Novonor, a Brazilian engineering and construction conglomerate formerly known as Odebrecht, owns 38.3% of Braskem’s total shares and 50.1% of its voting stock. The Brazilian state oil company Petrobras owns 36.1% of Braskem’s shares and 47.0% of its voting stock.

Braskem is Latin America’s largest petrochemical maker, generating $18.7 billion in sales last year. It operates four ethylene cracker complexes in Brazil. It also has an ethylene and polyethylene joint venture in Mexico and a large US polypropylene business.

Novonor faces big fines, including $2.6 billion from the US Department of Justice, for its involvement in a massive Brazilian corruption scandal. It has been looking to sell its Braskem stake for several years. And news of possible sales have appeared from time to time.

Novonor entered discussions with the US petrochemical maker LyondellBasell Industries in 2018, but the talks were abandoned in 2020. Apollo expressed interest in Novonor’s Braskem stake about a year ago, according to published reports at the time.

ADNOC has experience with regional petrochemical makers. It owns 25% of the European petrochemical firm Borealis, and it is partners with Borealis in the Abu Dhabi–based chemical maker Borouge.

With a dominant position in Latin American petrochemicals and the largest US polypropylene business, Braskem is an attractive acquisition target, says Jorge O. Bühler-Vidal, president of Polyolefins Consulting. “Buying Braskem would make sense for anybody who wants to broaden their footprint,” he says.

However, Petrobras, which is both a Braskem owner and a raw material supplier, would have to go along with a transaction. The Brazilian government might also prefer to see Braskem go to a Brazilian buyer. “At some point, the Brazilian government has to approve the transaction,” Bühler-Vidal says.