In a strategic move to diversify its investment portfolio, Abu Dhabi National Oil Company (ADNOC) has put forward a substantial $2.1 billion bid to acquire a significant portion of Braskem SA, Latin America’s leading petrochemical corporation.
This proposal signifies a major shift in strategy for Middle Eastern oil entities, which are progressively looking beyond crude oil amidst a changing global energy landscape.
The state-owned ADNOC has made an offer of $7.61 per share to take over the majority of the 38.3% stake currently held by Novonor SA in Braskem. The announcement caused Braskem’s shares to surge by up to 23% in the Sao Paulo stock exchange.
This latest offer places ADNOC at the forefront of what has turned into a competitive acquisition scenario, with other bids coming from Unipar Carbocloro SA and J&F Investimentos SA. Novonor, previously entangled in financial difficulties, is selling off its stake as part of its efforts to satisfy creditors after a prolonged and intermittent negotiation period. Previously, ADNOC had aligned with Apollo Global Management Inc. for a joint proposition for all of Braskem’s shares, but it has now proceeded independently from the investment firm.
The broader context of this move is the evident strategic pivot by Middle Eastern oil producers towards the chemical sector, which is anticipated to see robust growth even as the demand for oil may diminish due to the global shift to alternative energy sources. In line with this trend, ADNOC is also reportedly finalizing a deal to establish a joint petrochemical venture with OMV AG valued at over $32 billion, while Saudi Arabia is also collaborating with TotalEnergies SE to develop an $11 billion petrochemical complex.
Braskem, a leading producer of thermoplastic resins in the Americas and a significant player globally, is expected to benefit from the growing demand for its products, which are vital in the production of plastics, paints, and automobile components. The company’s existing facilities, which span Brazil and several other countries, offer potential for expansion to meet the rising consumption needs.
Furthermore, ADNOC has suggested a partnership model with Petroleo Brasileiro SA (Petrobras), following the governance framework established by Novonor. Petrobras, which is the second-largest shareholder in Braskem after Novonor, is currently reviewing Adnoc’s proposal and contemplating its right to acquire a share or the entire Novonor stake on offer.
The terms of ADNOC’s purchase include a 50% cash payment upfront, with the remainder to be settled through a payment-in-kind bond due in seven years, carrying an annual coupon rate of 7.25%. Braskem has detailed that the first interest payment would be deferred for four years, with the principal amount to be fully repaid after seven years.
