Argentine regulator rejects Braskem bid for Solvay Indupa

06 January 2014 22:43 Source:ICIS News

LONDON (ICIS)--Argentina's securities regulator rejected Braskem's bid to buy out the minority shareholders of the country's polyvinyl chloride (PVC) producer, Solvay Indupa, prompting the Brazilian petrochemical major to defend its offer on Monday.

Braskem signed an agreement in December to pay Belgium-headquartered Solvay $290m (€215m) for its 70.59% share in Solvay Indupa, and make a public tender offer (PTO) to buy the remaining 29.41% on the Buenos Aires Stock Exchange.

However, the Argentine peso (Ps) 1.35/share price offered by Braskem was judged by the Comision Nacional de Valores (CNV) last week to be below the fair market price, and consequently rejected. Shares were last traded at Ps5.70 before being suspended, the regulator noted.

Responding to the CNV’s decision, Braskem said it had prepared its PTO “based on two valuation processes conducted by independent appraisers, as well as on a legal opinion obtained from two law firms in Argentina”.

The company said that the Ps1.35 share price represented a premium of 153% of the amount to be paid to Solvay, the controlling shareholder.

“Braskem believes that the price offered is fair and was surprised by the decision of the CNV,” the company said, adding that it is “in talks with CNV to understand the specific objections underlying its decision and to define the next steps”.

The deal, which also requires approval by Brazil’s anti-monopoly commission (CADE), would boost Braskem’s PVC capacity to 1.25m tonnes/year and its caustic soda capacity to 890,000 tonnes/year, according to the company.

The deal would also establish an industrial base in Argentina for Braskem, a country in which the company has had a commercial presence for more than 50 years.

($1 = €0.74)

By Simon West