RIL revises Lyondell bid to $15bn

Reliance Industries has raised its bid for LyondellBasell to around $15 billion from an earlier offer of $13.5 billion.

The Mukesh Ambani flagship is said to have also included stock and cash options for shareholders and creditors in its revised offer to make it more lucrative.

Sources said the new bid was placed on February 19, the deadline for RIL to submit its revised proposal. However, the development could not be confirmed as RIL sources refrained from making any comments.

In early January, RIL had raised its offer for a controlling stake in LyondellBasell to an enterprise value of $13.5 billion.

The company had raised Rs 25,000 crore from the sale of treasury stock to fund its bid for the Dutch petrochemicals maker.

The latest revision in RIL’s bid comes after the management of LyondellBasell entered into a deal with unsecured creditors who had been blocking its attempts to emerge from bankruptcy.

The agreement, subject to court approvals, raised the amount that will be paid out to holders of general unsecured claims by $150 million.

Under the new agreement, an amount of $450 million will be distributed to the holders of general unsecured claims, millennium bonds and 2015 notes against the earlier offer of $300 million.

On February 16, LyondellBasell had said that the move would pave the way for the company to emerge out of Chapter 11 bankruptcy.

Reports say Evercore, an investment firm appointed by LyondellBasell, has put the enterprise value of the company at $14.5 billion.

The revised bid by RIL has, therefore, improved its prospects for the acquisition of the petrochemicals maker.

On Friday, the Reliance scrip came under heavy selling pressure on local bourses as rumours started doing the rounds that the petrochemical major may raise its bid for LyondellBasell.

Oil industry analysts who were not too bullish about a bid revision had said it would stretch the valuation of the company.

“In our view, any payment higher than $13.5 billion would stress the valuation of LyondellBasell, considering the still weak global petrochemical demand environment and subdued margins outlook… Concerns over higher valuation and the unsecured creditors’ agreement with LyondellBasell’s management reduce RIL’s chances to acquire LyondellBasell,’’ brokerage Sharekhan said in a recent report.

RIL, which has been looking overseas to strengthen its core business, had recently expressed its interest in acquiring Value Creation Inc, a Canadian company.

Related links:
Reliance - www.ril.com
LyondellBasell - www.lyondellbasell.com