Wednesday March 10, 2010

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By Sam Devraj  ( Assistant Editor )

Mukesh Ambani, India’s richest man

INDIAN energy giant Reliance Industries will look for other global acquisitions after being snubbed by Rotterdam-based takeover target LyondellBasell, a company source told reporters in Mumbai yesterday.

Bankrupt Lyondell rejected Reliance’s $14.5bn (£9.7bn) bid on Monday (March 8), saying it had opted to follow through on its own restructuring plan instead.

A deal would have created one of the world’s biggest petrochemical groups and its failure is a blow to Reliance owner Mukesh Ambani, India’s richest man, who plans to turn the India-focused cash-rich group into an international giant.

“Lyondell made it clear that they were not interested in our bid. It is time to look ahead for other global acquisitions,” a source at Reliance said on condition of anonymity. “We will consider all options.”

In a filing to a New York court in the US, where Lyondell is under bankruptcy protection, the Netherlands-based group with extensive US operations said it had “concerns” about Reliance’s proposal.

It said Reliance was seeking effective control even though it would only own a minority position and would not compensate LyondellBasell for the costs involved in pursuing a tie-up.

“Lyondell’s supervisory board concluded that proceeding with the present plan is in the best interest of creditors and the estate,” LyondellBasell spokesman David Harpole told Dow Jones Newswires late Monday.

Reliance saw opportunities from combining its petrochemical activities with Lyondell’s top-end plastics business, which would have given the Indian firm a global footprint and distribution network.

Post-Lyondell, Reliance may explore acquisition of “upstream” energy companies involved in oil and gas exploration and research rather than “downstream” companies with refineries, analysts said.

“An oil exploration firm will help Reliance further integrate its existing business. It may not look at a pure petrochemical firm,” said Deepak Pareek from Mumbai-based Angel Broking.

Analysts said Reliance may look for targets in Brazil, Venezuela or the oil-rich Gulf region.

Indian media have also linked Reliance to Canadian firm Value Creation, which controls oil sands in Alberta province.

Reliance has up to now focused on building itself into an Indian corporate behemoth by investing in its refining and other operations rather than through acquisitions.

But it has built up a war chest for acquisitions, generating $2bn (£1.34bn) through stock sales since last September, and has cash reserves of over Rs250bn ($5.5bn/£3.68bn).

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