Unipar makes bid for Braskem for US$2 bn

The latest bid for Brazilian petrochemical firm Braskem has come from Brazilian chemical compatriot Unipar Carbocloro for a controlling stake in the company at a premium of more than 40% over its previous closing price. This follows hot on the heels of the previous bid made by US asset manager Apollo Global Management and the Abu Dhabi National Oil Company (Adnoc).

Unipar, the largest producer of chlorine and caustic soda in South America and the second biggest producer of PVC, offered conglomerate Novonor 36.50 reais per share for a 34.37% stake Braskem, the company said. The deal is worth 10 billion reais (US$2 billion).

Novonor, formerly known as Odebrecht, is Braskem's main shareholder alongside state-run oil firm Petrobras, but has been looking at sell its controlling stake as part of a broader restructuring. Braskem’s shareholders also include Petroleo Brasileiro SA and creditor banks.

Proceeds of a potential sale would pay the conglomerate's creditors, mainly large banks, which would still need to greenlight any deal as Novonor's stake in Braskem is pledged as collateral.

Trigono Capital's chief investment officer, Werner Roger, who holds a position in Unipar, said the deal would be probably good for the company, especially if it is able to sell some Braskem assets in Mexico and the US.

He raised some doubts, however, including the view of Brazilian antitrust watchdog CADE, as Unipar would hold nearly 100% of the local chlor-alkali market, and how Unipar would obtain funding.

Unipar's offer represents a premium, competing with a previous cash-and-debenture 47.00-real-per-share bid from Apollo and Adnoc.

Analysts said the Unipar bid was more appealing because it appeared to be entirely in cash, estimating it to be 22% higher than the Apollo/Adnoc offer.

Under the proposed transaction, Novonor would retain a minority stake of 4% in Braskem.

The deal is aimed at increasing Unipar’s share of the Brazilian petrochemicals market. In May, Braskem received an offer from Adnoc and Apollo that includes cash, bonds and warrants that give the right to buy shares in the future.

UBS analysts led by Luiz Carvalho view Unipar’s proposal as more likely to move forward because it has a better price and a more simplified structure, and also because it would keep the company under “Brazilian control,” they said in a note to clients. Still, it’s unclear how Unipar would fund the potential acquisition, as its current market value is lower than the offer.

Publicly-traded Unipar said it would still hold talks with Petrobras over its stake, while Novonor said it will analyse the proposal.

(PRA)

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