Arab oil company makes R$10.5 billion offer to Petrobras for control of Braskem

The state oil company of Abu Dhabi, in the United Arab Emirates, Abu Dhabi National Oil Company (Adnoc) sent Petrobras a non-binding offer, worth R$ 10.5 billion, to buy Novonor’s share (formerly Odebrecht) at Braskem, the largest petrochemical company in the country.

Petrobras said that the proposal will still be evaluated. “It is worth highlighting that there was no decision by the Executive Board or the Board of Directors regarding the topic”, informed the Brazilian state-owned company.

Braskem is made up of Novonor, the main shareholder who holds 38.3% of the total capital, Petrobras, with 36.1% and minority partners, who account for the other 25.6%. In other words, the dispute over Novonor is also for control of Braskem.

As the second largest shareholder, Petrobras has preference in the acquisition. If he decides to do so, he will have control of the largest petrochemical company in the country.

In May, the president of the National Bank for Economic and Social Development (BNDES), Aloizio Mercadante, said that the decision is in the hands of President Lula. BNDES is one of Braskem’s creditor banks, alongside institutions such as Bradesco, Itaú and Santander.

Sources linked to the sector were concerned about the possibility of Petrobras using its right of preference and becoming Braskem’s controller. Some due to the risk of monopoly in the chain and others due to the history of political interference in Petrobras in other PT administrations.

Braskem is the main supplier of thermoplastic resins to the petrochemical industry in Brazil. It produces basic chemicals that are used in the production of plastic.

Adnoc’s offer was non-binding (that is, it is not official yet), with Novonor being assured, after closing the transaction, a minority stake representing up to 3% of the total shares currently issued by Braskem, which implies a value of R$37.29 per share.

The amount of R$10.5 billion would be paid half in cash, directly to Novonor’s creditors at the closing of the operation, according to Braskem’s Material Fact. The other 50% would be in cash and paid in bonds with a term of seven years.

The proposal would still depend on the completion of the “due diligence” process at Braskem to evaluate the possible exercise of “tag along” (the right of preference), as well as a new agreement with Petrobras shareholders and the situation of salt extraction in Maceió, Alagoas.

The extraction of rock salt by the company over four decades would have caused the ground to sink in five neighborhoods in the capital of Alagoas in 2018, affecting approximately 50 thousand people.

Adnoc had already made an offer in May. However, that time it was through a consortium with the North American manager Apollo.

In June, Unipar, the second largest Brazilian petrochemical company, offered approximately R$10 billion, or R$36.50 per share, entirely in cash, in a proposal that could be extended to other partners.

Also in the dispute are the Batista brothers, owners of JBS, who had a proposal previously rejected.