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Reliance looks to buy LyondellBasell assets

November 10/2009

Nov. 10 (Financial Times ) -- Reliance Industries, controlled by Mukesh Ambani, India’s wealthiest man, is considering buying assets belonging to LyondellBasell, the bankrupt international petrochemical group, people familiar with the matter said.

The Rotterdam-headquartered group, the world’s third-largest independent chemical company, has assets that could be worth as much as $6bn, these people said, and would mark the first large-scale overseas foray by the Indian industrialist.

 “There are some talks happening around LyondellBasell but nothing conclusive yet,” said one person familiar with the matter in Mumbai on Monday.

Reliance Industries declined to comment on LyondellBasell on Monday. But it said it was “reviewing a number of global opportunities for growth”.

It said: “The difficult operating environment of the past year has made available several interesting opportunities, where an investment by a strategic operator of industrial assets can add substantial value.”

It was not clear whether Reliance was considering buying all of the European and US assets of LyondellBasell.

LyondellBasell declined to comment but one person familiar with the company’s restructuring was sceptical that any sale of assets would take place while LyondellBasell is still finalising its restructuring plan with the US courts.

Any combination of the Indian company with LyondellBasell would elevate Reliance into the top echelons of chemical producers.

LyondellBasell last year had $50.7bn in revenues and employed 15,000 people across 19 countries while Reliance Industries generates more than $30bn in annual sales from petrochemicals, oil and gas and retailing.

Reliance is the world’s biggest producer of polyester yarn and fibre and is one of the top 10 producers of leading petrochemical products.

Fortune listed LyondellBasell as third in the list of the largest global chemical producers behind Dow Chemical, which had $57.5bn of revenue based on 2007 figures.

Indian bankers have been waiting for the next big business venture from Mr Ambani, ranked by Forbes as the world’s seventh-richest man with a personal fortune of $19.5bn.

Reliance’s net sales in the year ended March were Rs1,463.3bn ($31bn), up 6.7 per cent from a year earlier, with net profit of Rs152.8bn, down 21.7 per cent.

Reliance has ample funds for an acquisition of the size of LyondellBasell, according to analysts. “Reliance is definitely the company to watch for international acquisitions this year,” said a banker with an international group in New Delhi.

LyondellBasell’s US operations and one of its European holding companies filed for Chapter 11 bankruptcy proctection this year under the weight of a massive debt load and declining demand for its products.

The group took on billions of dollars in debt obligations a year earlier when billionaire Len Blavatnik led a $12.7bn leveraged buy-out of US company Lyondell by Basell of the Netherlands.

      MRC Reference

LyondellBasell.  The share in the Russian market in 2008:
 PE  - 1.4% (including HDPE - 2.5%, LDPE – 0.3%);
 PP – 4.1% (including block-copolymers - 9.5%).

Annual sales growth in Russia, during the recent 5 years:
 PE - 27%;
 PP – 88%.

The leader in the following polymers processing technologies:

 pipe extrusion;

 film extrusion;

 injection molding.




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