The country’s largest private sector company Reliance Industries Limited’s (RIL’s) bid to acquire Netherlands-headquartered petrochemicals giant LyondellBasell has triggered speculation about the likelihood of the largest ever cross-border deal initiated by an Indian company.
Analysts and research firms backed RIL’s financial capability to win the bid, pegged the enterprise valuation of the sick petrochemical giant at about $12 billion as RIL signalled strong intent to scale up its size and cash in on opportunities to mark its footprint on the global map.
“We believe this marks RIL’s intent and ability to inorganically grow its core businesses amid limited competition for asset acquisition and also increasing under-investment in downstream,” Goldman Sachs said in a research report released on Monday.
Citi Investment Research and Analysis said the timeline for the acquisition is likely to be prolonged.
“The final offer would be made after due diligence, which then will be will decided upon by the creditors against the initial reorganisation plan and other equity financing proposals. The timeline therefore is likely to be prolonged,” it said in research report on Monday.
LyondellBasell, which had $27 billion in assets and $19 billion in debt, filed for bankruptcy under Chapter 11 of US Bankruptcy Code on January 6 this year.
CLSA Asia-Pacific Markets termed proposed deal as a compelling opportunity for RIL.
“Reliance’s indicative bid is unknown, but we would view the acquisition as positive if the enterprise value that it has ascribed to LyondellBasell,” CLSA said in a latest research report.
Credit Suisse said in a research report that the non-binding offer would allow RIL to conduct due-diligence and give it enough time to evaluate while the bankruptcy process completes.