Abu Dhabi National Oil Company (ADNOC) and Apollo Global Management have reportedly offered Brazilian petrochemical giant, Braskem, up to 37.5 billion reais ($7.6 billion). The discussions are said to be in their early stages, and the offer is reportedly non-binding, according to unnamed sources familiar with the matter. Following a report by a columnist for Brazilian newspaper Folha de S.Paulo, Braskem shares soared in Brazilian trading. The offer of 47 reais per share more than doubled Braskem’s market value before the report, which caused shares to rise significantly.
However, the potential acquisition may be challenging, as Braskem’s two largest shareholders, Novonor and Petroleo Brasileiro, have not always seen eye to eye. In 2022, the companies had to pull a planned share sale due to a disagreement over pricing. Novonor reportedly said it had not received any proposal that suggested “a material or binding evolution in discussions”. Neither Apollo nor Petrobras provided any comment on the matter, while ADNOC did not immediately respond to requests for comment.
A deal for Braskem would be positive for shareholders, according to Malcolm Dorson, a portfolio manager at Mirae Asset Global Investments in New York. “The idea of Apollo, from the angle of a value-creating financial manager, and ADNOC, as a best-in-class operator, teaming up could create value for shareholders,” he said. In recent months, Brazilian newspapers including O Globo and Valor Economico have reported that Apollo was in talks to acquire Braskem. The offer from ADNOC and Apollo is one of several moves the Abu Dhabi oil company has made to expand its petrochemical business.
Earlier this year, ADNOC and state-run ADQ launched a joint venture to create a company that would produce hydrogen and other chemical products. The new company would produce blue hydrogen, which is created from natural gas using carbon capture technology. ADNOC has also partnered with South Korean petrochemical firm, SK Group, to explore opportunities in the UAE’s chemicals industry.
The move by ADNOC and Apollo is seen as an opportunity to gain a foothold in Brazil’s petrochemical market. Braskem is one of the largest producers of thermoplastic resins in the Americas, with operations in Brazil, the United States, and Mexico. The company produces a range of products, including polyethylene, polypropylene, and PVC.
The potential acquisition of Braskem by ADNOC and Apollo has generated a lot of interest and attention in the petrochemicals industry. Braskem is one of the world’s largest producers of polyethylene, polypropylene, and other petrochemical products, with a significant presence in the Americas and Europe.
If the acquisition were to go ahead, it would be a major positive for Braskem’s shareholders, who have seen their shares soar in value since the news of the potential offer broke. The offer of 47 reais per share is more than double Braskem’s market value before the report, indicating a high degree of interest from ADNOC and Apollo.
However, the acquisition is not without its challenges. Novonor and Petroleo Brasileiro, the two largest shareholders of Braskem, have had disagreements in the past, making it difficult to agree on a price. Moreover, discussions are still in early stages, and the offer is reportedly non-binding, meaning that there is no guarantee that the acquisition will go ahead.
In conclusion, the potential acquisition of Braskem by ADNOC and Apollo is a significant development in the petrochemicals industry, reflecting the strength and potential of the industry, as well as the growing interest of UAE investors in the Latin American market. While there are challenges to overcome, the acquisition could create significant value for Braskem’s shareholders and contribute to the long-term sustainability of the petrochemicals industry.
