Reliance chief eyeing Dow acquisition – report

27 February 2007 09:20  [Source: ICIS news]

SINGAPORE (ICIS news)--Reliance Industries’ chairman Mukesh Ambani is eyeing a major acquisition in the US, and Dow Chemical is on his list of three possible options, an Indian newspaper said on Tuesday. 

According to anonymous sources of The Times of India, Ambani is also considering to buy a US refiner with a capacity of 15m tonnes/year. The third potential multi-billion dollar company targeted was unnamed.

A Reliance spokesman contacted said that The Times’ article was a "speculative story" and declined further comment on it.

Ambani’s purported bid for Dow - one of the world’s largest chemical companies - would address Reliance’s current inability to produce value-added products such as specialty polymers, given the US major’s advanced technological capabilities, the report said. 

It added that Ambani, with his 12% stake in Reliance worth $5bn-6bn, would be able to acquire large overseas firms by teaming up with other buyers, without having too small a stake in them. 

A separate report in London’s Sunday Express cited a group of private equity firms comprising KKR Financial, Blackstone and Texas Pacific Group, among others, as being interested in the Dow purchase. 

Analysts have however cited various reasons explaining why a takeover by the private equity firms is unlikely to take place, including Dow’s relatively young top management’s commitment to its current strategy and the company’s sheer size making for a difficult exit strategy. 

Dow’s share price was consequently driven up by nearly 10% to $47.50 on the New York Stock Exchange at 08:06am EST (13:06pm GMT) on Monday.  

The company’s shares closed 3.54% higher at $44.99. 

Meanwhile, shares of Reliance Industries showed a muted response on the Bombay Stock Exchange, dipping 0.19% to rupee (Rs) 1,404.55 ($31.80) at 14:05 local time (08:35 GMT).

($1 = Rs44.16)

By: Keith Tan Liming
+65 6780 4359

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