LyondellBasell and Odebrecht, the controlling shareholder of Braskem, confirmed on 15th June that they have entered into discussions for LyondellBasell to acquire Braskem. A deal would make LyondellBasell a top-three player in chemicals with nearly $50 billion in annual sales. LyondellBasell had 2017 revenue of $34.5 billion and Braskem $15.4 billion. LyondellBasell has separately agreed to acquire A. Schulman which had 2017 revenue of $2.5 billion. 

A deal would make LyondellBasell the largest global maker of polyolefins with the top position in polypropylene (PP) and a top-five position in polyethylene (PE). Braskem has PE capacity of roughly 3 million metric tons/year spread across several sites in Brazil and PP capacity of nearly 4 million mt/year spread across sites in Brazil, the United States, and Germany.

Braskem’s non-Brazil assets include a 75% stake in Braskem Idesa, an ethane cracker and derivatives complex in Mexico that started up in 2016 as well as PP assets in the United States and Germany. Braskem acquired Sunoco Chemical’s PP assets in the United States in 2010 and Dow Chemical’s US and Germany PP business in 2011.

Odebrecht holds 50.1% of Braskem’s voting shares and Petrobras holds 47%. Petrobras confirmed that it has received notification that Odebrecht had entered into discussions with LyondellBasell. “If the negotiation is successfully concluded, Petrobras will analyze the terms and conditions of the LyondellBasell offer, in order to evaluate the exercise of its rights provided for in the shareholders agreement of Braskem,” Petrobras said in a statement. Odebrecht has the sole power to approve the business plan Braskem under the shareholders agreement. However, Braskem is prohibited from taking certain strategic actions unless a consensus is reached between Odebrecht and Petrobras.

“We believe that the potential combination of LyondellBasell’s and Braskem’s complementary strengths, product portfolios and operational footprints would create significant value for our shareholders, customers and employees,” LyondellBasell and Odebrecht said in a joint statement.

Braskem’s board and management have been informed of the existence of these discussions. LyondellBasell and Odebrecht say they do not intend to make any further comment until the discussions conclude.