The settlement of a dispute between Dutch-based LyondellBassell with creditors paving way for the company to come out of bankruptcy may force Mukesh Ambani-controlled Reliance Industries Ltd (RIL) to either raise its offer to acquire the petrochemical firm or abandon its bid all together.
A Reuters report said that senior creditors, including private equity firm Apollo Management, who are controlling Lyondell’s bankruptcy process in the US, may take a loss at the price RIL has proposed and gain more from an independent Lyondell, which has clouded RIL’s prospects.
RIL has been keen on acquiring LyondellBasell and has offered a deal that would value it about $13.5 billion.
Lyondell said on Tuesday that it would continue with its reorganisation plan aimed at exiting bankruptcy.
“It seems like RIL is effectively out of the race for now,” said the Reuters report quoting Deepak Pareek, an oil and gas analyst at Angel Broking.
“We feel $12 billion to $13 billion is a fair price for Lyondell, not more,” Pareek said.
RIL declined comment, while Lyondell, which is headquartered in Luxembourg, said any alternative to its latest plan would need to be substantially more attractive.
“Any alternative plan would require a third party to submit a definitively higher and better offer that maximises the value for our creditors,” Lyondell spokesman David Harpole said.
Reliance, which has raised $2 billion by selling stock to fund its expansion plans, has been hedging its bets as it looks to expand overseas. The company is understood to have recently made a $2 billion offer to buy private Canadian oil-sands firm Value Creation Inc, but sources close to RIL said the company may not be an ideal target.
Sources said Reliance is being advised by boutique investment banking firm Perella Weinberg Partners on the Lyondell bid
If Reliance bought Lyondell, it would be catapulted into the ranks of top global petrochemical makers such as Saudi Arabia's SABIC, Germany's BASF and Dow Chemical Co.