Unstructured Finance

Reliance aims big with $12 bln bid for LyondellBasell

Ranked by Forbes as India’s richest man with a net worth of $32 billion, Mukesh Ambani is no stranger to taking risks.

The move by conglomerate Reliance Industries, controlled by Ambani, to bid for bankrupt LyondellBasell is a calculated one. Markets seem to think this is a bargain and investors pushed up Reliance’s stock nearly 4 percent on Monday.

If the deal, which sources say may be worth $12 billion,  goes through, it would catapult Reliance into the ranks of top petrochemical makers such as Saudi Arabia’s SABIC, Germany’s BASF and Dow Chemical Co.

The bid comes at a time when asset prices have fallen globally in the wake of the economic crisis but there are still some lingering doubts over whether the worst is over for the global economy.

Reliance hasn’t shied away from making mega investments during downturns.

Last December, Reliance commissioned a 580,000 barrels per day refinery next to its existing 660,00 bpd plant  in the western Indian state of Gujarat, creating the world’s biggest oil refining complex just as global oil demand began to collapse.

Reliance aims big with $12 bln bid for LyondellBasell

Ranked by Forbes as India’s richest man with a net worth of $32 billion, Mukesh Ambani Mukesh Ambani, chairman of Reliance Industries, is no stranger to taking risks.

The move by conglomerate Reliance Industries, controlled by Ambani, to bid for bankrupt LyondellBasell is a calculated one. Markets seem to think this is a bargain and investors pushed up Reliance’s stock nearly 4 percent on Monday.

If the deal, which sources say may be worth $12 billion,  goes through, it would catapult Reliance into the ranks of top petrochemical makers such as Saudi Arabia’s SABIC, Germany’s BASF and Dow Chemical Co.

M&A: lessons from history

Two chunky bits of M&A research landed this week (both, incidentally, drawing on Thomson Reuters data).

Cass Business School’s recently established M&A Research Centre sounded a note of a caution about the merits of buying floundering companies, even if such deals are initially welcomed by the market.

“Companies who bought distressed or insolvent rivals over the past quarter-century suffered lower returns on equity and underperformed buyers of healthy firms, a study released on Monday showed…

Heineken brews up loan-to-own deal

Distressed debt investors seek to pick out the diamonds in the rough, the good companies that can be turned around given a fair wind and the right management and capital structure.

These specialist investors buy up the debt of struggling companies aiming either to sell on the debt when the company recovers, or grab an equity stake if the company is forced to cut its borrowing via a debt-for-equity swap.

Stepping into this territory is Dutch brewer Heineken, which has bought up 49 percent of the debt of Globe Pub Company, a UK pub chain owned by property entrepreneur Robert Tchenguiz.

  •