Engineering News

Reliance said to be mulling petchem deal, BP in frame
Sun Aug 28, 2005 05:19 AM ET

MUMBAI, Aug 28 (Reuters) - India's top petrochemicals maker, Reliance Industries Ltd., may be close to launching a multi billion dollar bid for the North American unit of a big oil firm, a newspaper said on Sunday.

The Times of India newspaper did not name the firm on the other end of the potential deal, but its story appeared to point at the olefins and derivatives business of BP -- put up for sale by the British oil giant last year.

The Times of India gave no sources for the front page report. It said the bid could put Reliance among the world's top five petrochemical companies, from 10th now.

"Speculation is rife that (chairman Mukesh Ambani) is close to launching a bid for a $15 billion North America-based company which in turn is a wholly-owned subsidiary of one of the world's biggest multinational giants with a name that is synonymous with petroleum," the newspaper said.

A Reliance spokesman contacted about the report was unable to comment.

The paper said the bid could exceed 200 billion rupees ($4.6 billion), which would be the biggest attempt by an Indian company for a global acquisition.

It said the parent of the potential bid target reported a $900 million loss in its petrochemicals business in 2004 and sold businesses which did not meet its financial and strategic criteria. It created the subsidiary in question in April 2004, and said it planned to either sell the new company or launch an initial public offering.

The unnamed subsidiary opened its Chicago global headquarters in April this year, has 8,000 employees worldwide and is among the largest independent petrochemicals companies in the world with more than $12 billion in assets and 40 billion pounds of petrochemicals production capacity, it said.

This description fits a set of BP assets.

BP Plc, the world's second-largest oil group by market capitalisation, rebranded its olefins and derivatives plastics business this year ahead of a planned sell-off.

The new unit, called Innovene, had sales of over $15 billion last year, is the fourth largest petrochemicals firm in the world and is headquartered in Chicago. It is expected to float a minority share towards the end of the year.

Times of India reported Reliance Industries has reserves of 390 billion rupees.

"In case the deal does not go through, it has already lined up bids for two other petrochemical firms, one of them Canadian, with an annual sales of $1 billion. The deal size, though, is expected to be much smaller," it said.

Source: Reuters

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