Reliance Industries is offering about $12 billion to buy a controlling interest in bankrupt chemical company LyondellBasell Industries to create one of the largest petrochemical firms in the world, two sources with direct knowledge of the deal said.
“The offer is in the vicinity of about $10 to $12 billion,” one source said, while another said it was around the upper end of the band. The two sources declined to be named as they are not authorised to speak to the media.
The deal, if closed, will make it one of the largest overseas acquisitions by an Indian company. In 2007, Tata Steel bought Anglo-Dutch Corus steel maker for $13 billion.
On Saturday LyondellBasell said Indian energy giant Reliance Industries has made a non-binding cash offer to buy a controlling interest and the offer represented a potential alternative to its previously filed reorganisation plan to emerge from Chapter 11 bankruptcy.
Reliance said it had made a preliminary non-binding offer to acquire, for cash, a controlling interest in LyondellBasell upon its emergence from Chapter 11.
“The offer is preliminary and subject to customary conditions including conduct of due diligence, documentation and receipt of sufficient creditor support,” it said.
Both Reliance and LyondellBasell did not disclose the size of the offer in their statements.
Bank of America Merrill Lynch is among the advisors for Reliance, they said.
Reliance, India’s largest conglomerate, has been looking to expand, taking advantage of low valuations to delve into international markets.
The company is aiming to attain global scale for its conventional energy platform — petrochemicals, refining and oil and gas exploration — and invest in its new businesses such as retailing and alternative energy, chairman Mukesh Ambani said this week at the company’s annual meeting of shareholders.
In September, Reliance raised about $660 million in a share sale that analysts said was likely to help the firm make acquisitions.
It has $4 billion in cash, $8bn in treasury stock that can be sold and if it doubles its current net debt-to-equity of 0.35x it can borrow another $10bn, Macquarie said in a recent research note.
Luxembourg-based LyondellBasell filed for bankruptcy protection in January, unable to meet its debt obligations after demand dropped for petrochemicals products during the global economic downturn.
The company, owned by investor Len Blavatnik through New York-based Access Industries, took on billions of dollars of debt obligations when an Access Industries-led group bought the company in 2007.