Private deals rise in industry - LyondellBasell

26 March 2008 17:50  [Source: ICIS news]

HOUSTON (ICIS news)--The past few years have seen the emergence of private equity and privately-held companies as a driving force in the global chemicals industry, LyondellBasell CEO Volker Trautz said on Wednesday.

Trautz became the leader of the polymers, petrochemicals and fuels giant in December upon the $19.4bn (€12.4bn) merger of Basell and Lyondell.

“Our merger created one of the largest private companies in the industry,” Trautz said at the CMAI World Petrochemical Conference.

Speaking on the latest developments in the economic life cycle of the global chemicals industry, Trautz noted the emergence of private equity and private ownership in the industry. This development was brought about partially by low-cost borrowing and in part by out-of-favour stocks, he said.

A third of the large global chemical mergers and acquisitions (M&A) between 2003 and 2005 were accomplished through private means, Trautz said.

Two types of private ownership have emerged, he added.

“The first is private equity, where the buyer’s objective is to recover their money relatively quickly by adding leverage and restructuring, and then issuing stock and bringing the company back into a public role,” he said.

“Then there are other private owners - and we see ourselves in this category - where individuals and families have entered our industry and developed organisations with a commitment to building value, building scope and scale, and building large, multi-national industrial companies.”

Private ownership offers several advantages, Trautz said, including freedom from the pressures and whims of the stock market.

A privately held company can take countercyclical measures that might seem out of vogue at present but can aid in the company’s long-term goals, he said.

The private company has the ability to act quickly when needed but also has “the luxury of patience because we are not fixated on immediate results,” Trautz said.

($1 = €0.64)

By: Brian Ford
+1 713 525 2653

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