ADNOC launches fresh non-binding offer for Novonor’s stake in Braskem

SAO PAULO (ICIS)–Abu Dhabi’s oil major ADNOC has launched a fresh non-binding offer to acquire conglomerate Novonor’s stake in Brazil’s polymers major Braskem for Brazilian reais (R) 10.5bn ($2.14bn).

If the transaction goes ahead, ADNOC would become the controlling party in Braskem because Novonor has a 38.3% stake in the producer’s capital structure, but its voting capital stands at 50.1%.

Brazil’s state-owned energy major Petrobras controls a 36.1% stake, with 47.0% of voting rights.

Novonor, successor of scandal-ridden Odebrecht, is under recovery procedures and aiming to reduce its debt burden. Odebrecht’s debt is estimated at R15.0bn. Its stake in Braskem acts as a guarantee for its debt commitments with the banks.

In a material fact filed with Brazil’s security and exchange commission CVM, Braskem said the price ADNOC is willing to pay for Novonor’s stake would correspond with R37.29 per share.

The price would represent a notable premium, with the latest closing price for Braskem’s shares at R17.28.

“The proposal is also conditioned, among other usual conditions in transactions of this nature, to (1) satisfactory completion by ADNOC of due diligence; (2) determination of possible additional liabilities arising from the event in Alagoas; (3) no existence of unaccounted for or unreported material contingent liabilities; (4) alignment and conclusion of a new shareholders’ agreement with Petrobras,” said Braskem.

ADNOC’s non-binding acquisition offer is the second the company has launched this year. In May, it and US private-equity firm Apollo made an offer to Novonor for the Braskem stake. The offer expired and Apollo dropped out from the proceedings in September.

In June, Brazil’s chemicals producer Unipar launched a non-binding offer, and in July Brazil’s conglomerate JBJ Agropecuaria launched an offer to acquire the stake; both expired.

Earlier this week, Braskem said its losses in the third quarter widened, year on year, as the polymers markets it mostly operates in – polyethylene (PE) and polypropylene (PP) – remain in the doldrums.

Under the terms of Braskem’s shareholders agreement, Petrobras could either exercise its tag-along rights if Novonor sold its stake or acquire Novonor’s stake directly.

On Thursday, the company said: “This proposal [ADNOC’s offer] will still be evaluated by Petrobras’ competent bodies… The company reaffirms that it is carrying out due diligence on Braskem, for the possible exercise of tag along or preemptive rights, in the event of the sale of the shares held by Novonor in Braskem.

“It is worth noting that there has been no decision by the executive board or the board of directors on this matter.”

Later on Thursday, Braskem is to hold a conference call; updates to come.