Braskem SA’s stocks and bonds gained after fellow Brazilian company Unipar Carbocloro SA offered to acquire a 34.4% stake in one of the world’s top petrochemicals makers for 10 billion reais ($2 billion).
(Bloomberg) — Braskem SA’s stocks and bonds gained after fellow Brazilian company Unipar Carbocloro SA offered to acquire a 34.4% stake in one of the world’s top petrochemicals makers for 10 billion reais ($2 billion).
Unipar Carbocloro SA, the largest producer of chlorine and caustic soda in South America and the second biggest producer of PVC, is looking to acquire a controlling stake in Braskem SA from Novonor SA, one of the Sao Paulo-based petrochemical’s shareholders. The offer would compete with an attempt by Abu Dhabi National Oil Co. and Apollo Global Management to acquire control of Braskem.
Preferred shares of Braskem climbed as much as 13% in Sao Paulo on Monday and are on track for their longest winning streak in more than two years. Bonds of Braskem due in 2033 gained as much as 1 cent on the dollar to 97 cents, according to Trace data.
Unipar offered 36.5 reais per share, Braskem said in a filing, adding that Novonor would keep 4% of the outstanding shares. The non-binding offer was presented to Novonor on Saturday. The proposal is a 42.5% premium compared to the closing price on June 9, before the offer. Braskem’s shareholders also include Petroleo Brasileiro SA and creditor banks. Novonor said it will analyze the proposal.
“It’s an attractive asset for having its valuation below the historical average, in a sector with high growth potential,” said Fernando Valle, an analyst at Bloomberg Intelligence.
Braskem is the market leader in thermoplastic resins in the Americas, and the largest producer of polypropylene in the United States. Unipar’s offer is subject to a series of conditions. Petrobras has rights of first refusal and tag along rights. The Rio de Janeiro-based oil producer declined to comment. Petrobras’ management has said multiple times that they do not intend to sell assets and could increase its participation in the petrochemical sector.
“The resources needed to pay Novonor’s debt imply a premium to the current share price,” analysts at Banco Safra SA, including Conrado Vegner, said in a note on Monday. “As per Braskem bylaws, if Unipar’s offer is accepted, it would have to be extended, in the same conditions, for all Braskem shareholders.”
The deal is aimed at increasing Unipar’s share of the Brazilian petrochemicals market. In May, Braskem received an offer from Abu Dhabi National Oil and Apollo that includes cash, bonds and warrants that give the right to buy shares in the future. UBS analysts led by Luiz Carvalho view Unipar’s proposal as more likely to move forward because it has a better price and a more simplified structure, and also because it would keep the company under “Brazilian control,” they said in a note to clients. Still, it’s unclear how Unipar would fund the potential acquisition, as its current market value is lower than the offer.
Unipar plans to launch tender offers in Brazil’s B3 stock exchange to acquire common shares and class A and class B preferred shares owned by Braskem’s minority investors. It will also offer to acquire up to all Brazilian Depositary Receipts, or BDRs, that trade on the New York Stock Exchange.
“At the appropriate time, we will negotiate with Petrobras its stake under the terms of the transaction,” said Unipar, citing a potential new shareholders agreement regarding Braskem’s new capital structure.
(Includes analyst comments in fourth paragraph)
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