Friday, May 11, 2007

Will Basell Owner Put Lyondell in Play?

Russian industrialist Leonard Blavatnik, who controls Access Industries, the owner of Basell, has purchased the right to acquire an 8.3% stake in Lyondell Chemical. Blavatnik signed a forward contract with Merrill Lynch that grants him the option of purchasing about 21 million Lyondell shares at $32.11/share, or $674 million. Merrill Lynch has hedged its exposure by agreeing to acquire Occidental Petroleum’s 8.3% stake in Lyondell, in a deal that closed on May 9. Blavatnik says that he “may seek to engage in discussions with [Lyondell] concerning, among other possible scenarios, the merits of an offer to acquire all of [Lyondell] and the merits of a merger, combination or similar transaction between the [Lyondell] and affiliates… , including Access Industries or Basell.” Access Industries had not had formal discussions on this investment with Lyondell prior to the agreements, according to sources close to Access Industries. Blavatnik is expected to attempt to call Lyondell CEO Dan Smith later today, according to those sources. Access is also a leading candidates to acquire GE Plastics, financial sources tell CW. Could Blavatnik be assembling an integrated chemicals giant? Lyondell would provide Basell's operations with propylene and ethylene, and GE Plastics with benzene and styrene.

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