Chemical and plastics maker Basell said on Tuesday it would buy U.S.-based Lyondell Chemical in a deal valued at about $12.14 billion, giving Basell access to a key raw material and Lyondell's refining capacity.
Basell, which is owned by billionaire industrialist Len Blavatnik's Access Industries, has been on the prowl for an acquisitions in the chemical sector and recently lost out in bids for Huntsman and General Electric's GE Plastics.
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Indeed, JPMorgan analyst Jeffrey Zekauskas raised the possibility of a major oil company moving to trump Basell's $48-per-share bid. "We speculate that a strategic bidder could value the refining and petrochemical assets of Lyondell at $50 per share or above," said Zekauskas in a note to clients.
Basell's bid represents a 19.6% premium to Monday's closing price of $40.12.
Houston-based Lyondell produces propylene monomer -- the key building block for Basell's largest product, polypropylene.
Both companies also make polyethylene, a plastic used in consumer products and packaging.
The all-cash deal, which values the Lyondell at $12.14 billion, is based on about 252.89 million shares outstanding as of March 31.
The Lyondell deal has a total enterprise value of about $19 billion, including the assumption of debt, the companies said in a joint statement.
The transaction has been unanimously approved by the boards of directors of both Basell and Lyondell.
In May this year, Blavatnik signed an agreement that gave him the right to buy 8.3% of Lyondell' shares, for $674 million, or $32.11 a share.
Blavatnik is the founder of Access Industries, a privately held, U.S.-based industrial group which counts among its investments plastics company Basell Holdings, BP's Russian oil affiliate TNK-BP Holding, aluminum producer UC RUSAL and Warner Music.
Basell and Lyondell together would have had combined 2006 revenue of about $34 billion and 15,000 employees around the world, according to the companies statement.
The deal is expected to close within the next several months and is not subject to financing.