Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Petrochemicals

LyondellBasell, Odebrecht in talks over latter's Braskem stake

Agriculture | Energy | Coal | Electric Power | Natural Gas | Oil | Metals | Petrochemicals | Shipping

2020 US Elections

Oil

Platts Market Data – Oil

NGL | Oil | Crude Oil | LPG | Oil Risk | Petrochemicals

Platts University New York

Petrochemicals | Shipping

A&R Logistics to build new resin export facilities on US East Coast

LyondellBasell, Odebrecht in talks over latter's Braskem stake

Houston — Global petrochemical producer and refiner LyondellBasell is in exclusivetalks with Odebrecht to possibly buy the Brazilian engineering andconstruction conglomerate's controlling 38.3% interest in Braskem, Lyondelland Odebrecht said Friday.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

Acquiring Odebrecht's Braskem shares would build on Lyondell's Latin Americandistribution network with a production footprint in Brazil, South America'slargest economy. A deal also would give Lyondell controlling interest inBraskem's US and European polypropylene operations.

"We believe that the potential combination of LyondellBasell's and Braskem'scomplementary strengths, product portfolios and operational footprints wouldcreate significant value for our shareholders, customers and employees,"Lyondell and Odebrecht said in a joint statement. "Braskem's boardof directors and management have been informed of the existence of thesediscussions."

If completed, the acquisition of Odebrecht's stake in Braskem would beLyondell's second major deal in recent months to widen its petrochemicalreach. Lyondell expects to close its $2.25 billion acquisition of plasticcompound and resin supplier A. Schulman in the third quarter this year pendingregulatory approvals, expanding its compounding operations beyond automotiveto markets involving packaging and consumers, electronics and appliances.

Both Lyondell and Braskem produce olefins and plastic resins, includingpolyethylene. Latin America is expected to be a major target market for muchof the nearly 6.5 million mt/year in new polyethylene capacity starting up inTexas and Louisiana from 2017 to 2019, with more coming in 2020 and beyond.

Braskem, which bills itself as the largest thermoplastic resins producerin the Americas, also is building a 450,000 mt/year PP plant along the HoustonShip Channel slated to start up in the first quarter of 2020, adding to itscumulative US PP capacity of 1.57 million mt/year at five plants. The bulk ofBraskem's olefin and polymer production is in Brazil, where it operates fourworld-scale complexes.

Lyondell has not taken on as many major new petrochemical infrastructureprojects as its competitors along the US Gulf Coast in response to plentifulcheap ethane from the US natural gas shale boom.

While the company is building a 549,000 mt/year polyethylene plant andthe world's largest propylene oxide and tertiary butyl alcohol plant along theHouston Ship Channel, Lyondell expanded its current ethylene capacity inCorpus Christi, Texas, rather than build a new cracker. The companyindefinitely delayed an ethylene capacity expansion at Channelview to focus onthe PO/TBA project.

The Wall Street Journal reported in October that Lyondell could be consideringa Braskem takeover, and a deal could value the Brazilian petrochemicalproducer at $10 billion to $12 billion. Some analysts have said thosevaluations were too low, with one source saying Braskem's hardware alone wasworth more.

Odebrecht has maintained for months that the company intended to maintainits presence in the petrochemical sector. Last month it denied having received a proposal regarding its participation in Braskem, and said it"continues to work on alternatives that add value to the company and all ofits shareholders."

Braskem has been on the market since 2016. While Odebrecht is Braskem'slargest shareholder, Brazil's state-owned oil company, Petrobras, is thesecond-largest stakeholder with 36.1% ownership. Petrobras has repeatedly saidthe company wants to divest interests in biofuels, petrochemicals,fertilizers, refining and natural gas distribution to focus on offshore oiland gas production.

Odebrecht and Petrobras also were linked to a corruption scandal in Brazil,and in late 2016 Braskem and Odebrecht reached settlement agreements with theUS and Swiss governments tied to the "Operation Car Wash" anti-corruptioninvestigation.

Reuters on April 19 cited unnamed sources in reporting that Odebrecht hadagreed to sell its Braskem shares within two years to repay new loans acquiredto cover bond repayments. Braskem had said in a securities filing thatOdebrecht's stake was serving as collateral. Banks can seize the shares andsell them if the loans are not repaid by May 2020, the news agency reportedlast month.

Petrobras Friday said it had received confirmation from Odebrecht ofthe talks with Lyondell, "for a potential transaction involving the transferof Odebrecht's entire interest in Braskem," according to a statement posted onPetrobras' website.

"If the negotiation is successfully concluded, Petrobras will analyze theterms and conditions of the LyondellBasell offer, in order to evaluate theexercise of its rights provided for in the shareholders agreement of Braskem,"Petrobras said.

In January, Petrobras said it was in talks with Odebrecht regarding thecompanies' shared ownership of Braskem, but those negotiations did not involvea sale of shares. Petrobras said it was willing to sell its Braskem shares,"but not to Odebrecht."

Instead, those talks involved revisions to terms and conditions of theshareholder agreement, noting further that the process was "important forPetrobras to be able to sell its shares to a third party."

Feedstock contract negotiations between Braskem and Petrobras areongoing, with a five-year, 7 million mt/year naphtha deal set to expire in2020 and a gas deal up to 2021.

--Kristen Hays, kristen.hays@spglobal.com

--Phillipe Craig, phillipe.craig@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com