ADNOC and Apollo's Billion-Dollar Deal: Braskem Acquisition

Abu Dhabi: Abu Dhabi National Oil Company (ADNOC) has partnered with US-based asset manager Apollo to speed up the sale of Brazilian petrochemical company Braskem, a deal that has been pending for years. If successful, the deal could amount to R$37.5 billion. According to sources reveal that a formal offer will be presented soon after Novonor's creditors indicate a willingness to negotiate. ADNOC and Apollo plan to acquire 100% of Braskem, starting with Novonor's controlling stake. The next move will be to make the same proposal to Petrobras, the second largest shareholder in Braskem.

ADNOC and Apollo outlined their proposals to lenders, including Santander, Banco do Brasil, Bradesco, Itau Unibanco, and the Brazilian Development Bank (BNDES), on Friday (05).

Potential buyers made a commitment to present a formal bid of R$47 per share for the purchase of 100% of Braskem. Their plan is to leverage the Brazilian company as a base for petrochemical operations throughout the Americas. According to our sources that the banks would recuperate all the credit previously granted to Odebrecht (currently Novonor), resulting in the elimination of almost R$15 billion in debt. Furthermore, an offer will be extended to Petrobras and other investors in the petrochemical firm.

As part of its plan to take Braskem private in Brazil, Apollo had considered making the stocks available for trading solely on the NYSE. Recently, the U.S.-based asset manager approached ADNOC with a partnership proposal. Following President Luiz Inacio Lula da Silva's visit to the UAE and subsequent cooperation agreements, the Abu Dhabi-based energy giant expressed interest in becoming a petrochemicals operator in Brazil, leading to their involvement in the negotiation of the Braskem deal.

Novonor and Morgan Stanley, who are advising on the sale of Braskem, made attempts to reach out to potential buyers in the United Arab Emirates, including Mubadala Capital, a subsidiary of Abu Dhabi's sovereign wealth fund, but were unsuccessful last year. As per the proposal submitted to the banks, the sale would involve a cash payment and the renewal of Braskem's credits and would not differentiate between the activities of the petrochemical company, including the Alagoas PVC business. In 2019, LyondellBasell decided to withdraw its plans to acquire Braskem due to a multi-billion liability incurred by the latter.

Our sources have revealed that J&F, the holding company of the Batista brothers, along with Unipar, are still interested in acquiring the petrochemical company, despite Apollo's delay in carrying out expensive due diligence. However, obstacles may arise in the deal due to the Brazilian government's affinity towards Braskem, which was formed after a merger supported by former President Lula during his tenure at Petrobras.

The Abu Dhabi National Oil Company, established in 1971, consists of various petrochemical and oil and gas subsidiaries. Boasting an oil production capacity that surpasses 4 million barrels per day, it is projected to increase to 5 million barrels per day soon.