As the market begins to pick up again, businesses are looking for good deals in the chemical industry. And Indian conglomerate Reliance Industries has marked out struggling Dutch-based US chemical maker LyondellBasell, which is still in Chapter 11 bankruptcy proceedings, as a prime target. If the deal goes ahead it would give the new company combined revenues of more than $80bn, instantly make Reliance one of the biggest chemical companies in the world, outstripping Dow Chemical.
Reports from a range of news sources suggest that Reliance has offered between $10-12bn for LyondellBasell, which analysts have said would make it a good deal for Reliance. Reliance Industries confirmed that it has made a cash offer to buy a controlling share of LyondellBasell on its emergence from Chapter 11 restructuring.
LyondellBasell’s business is concentrated in polymers, petrochemicals and fuels and its purchase by Reliance would substantially increase its global reach, giving it improved access in 19 countries. Reliance, whose core business is in petroleum products and petrochemicals, has a turnover of $28.85bn, while LyondellBasell had revenues of $51bn.
LyondellBasell hit problems shortly after it was formed in December 2007 when Netherlandsbased Basell bought US Lyondell Chemical, saddling itself with debts of $26bn (C&I 2009, 1, 5). Two months later it voluntarily entered Chapter 11 bankruptcy protection as cheap credit dried up in the world market.
Meanwhile, Mitsubishi Chemical Holdings is reportedly planning to acquire Japanese fibres and resin maker Mitsubishi Rayon for ¥228bn ($2.6bn). Mitsubishi Chemical Holdings had sales of ¥2909bn ($33.7bn) in 2008, while Mitsubishi Rayon’s sales were ¥418bn ($4.8bn). The combined business would have estimated revenues of ¥3.25 trillion ($38bn).
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