Reliance Bid Said to Be Rejected By Lyondell

According to Bloomberg, the bankrupt LyondellBasel Industries AF rejected a $14.5 billion bid from Reliance Industries, India’s largest oil refiner and explorer. The offer is said to have been pitted against creditors of Lyondell, Apollo Management LP. The New York based private equity firm is said to have backed a reorganization plan that would have given them equity stake in the bankrupt chemical maker.

Analysts believe Reliance has other options to pursue. They believe Lyondell was an opportunistic move to buy a distressed asset. However, many analysts are of the opinion that bidding higher reduces the shareholders upside. Earlier, the company had rejected a $13.5 billion bid by Reliance, according to the Wall Street Journal. The acquisition would have created $80 billion in revenues and would have given Reliance access to chemical plants and oil refineries in the U.S. Reliance shares moved up by 2.1 percent to rupees 999 in today’s trading. Analysts seem to have reacted positively to the decision as they thought the valuation for Lyondell was too high. The shares have dropped 9.7 percent against 4.1 percent decline in the Sensex. Reliance has an outstanding debt of $15 billion and about $3.2 billion in cash and cash equivalents.

The chemical maker was formed in 2007 in a deal financed by $22 billion in debt and was bought by Basell AF, a unit of Access Industries Holdings. Lyondell is said to be merging with private equity firm Hexion Speciality Chemicals Inc.