Reliance Bid For LyondellBasell To Kick-Start M&A Activity

Now that both Reliance Industries and LyondellBasell have confirmed that an offer has been made for the world's 4th largest chemical company, we can anticipate a significant increase in M&A activity in the chemical industry.

Some industry analysts believe that the reported price, of somewhere between $10M - $12M, is relatively low, given LyondellBasell's recently published EBITDA results and could initiate a bidding war involving a number of prospective suitors.

The news follows hot on the heels of the various reports that IPIC is in talks with as many as 5 potential targets, including Bayer MaterialScience and other companies possessing technologies technologies which would support the development of the ChemaWEyaat project in Abu Dhabi.

There have also been reports that Dow Chemical has been in talks regarding the sale of a number of assets, as well as reports that Sinopec was looking at a number of potential targets in Europe. I've also heard several suggestions that a number of the Middle East majors will be looking to complete further acquisitions in 2010.

It looks certain that 2010 will be a major year of change in the sector, with the emergence of some new superpowers in the industry and further consequent changes to the asset footprint. Time for the site people to start changing the signposts and the letterheads once again!

Weekly News Round Up

A little earlier than usual - this week's round-up of news and updates on previous stories

• IPIC has responded to reports that it was in talks with Bayer MaterialScience and four other global petrochemical groups.
  An IPIC spokesman commented: "At present there are no firm plans to do anything with Bayer MaterialScience, or any other chemical company. A number of initiatives are under consideration internally, but nothing has been decided."
  

• Three officials at a subsidiary of the UK mining company Vedanta Resources have been arrested in India following the collapse of a chimney in one of its power stations which killed 41 people.
  The tragic incident occurred in September at Vedanta's Bharat Aluminium Company (Balco) power plant in Chhattisgarh, central India, during heavy storms. After a two-month investigation, local police have arrested Balco's vice-president, who was also the plant's project manager, its associate general manager and a graduate trainee engineer
  

• The chief executive of the UK Chemical Industries Association (CIA) has warned  that the UK runs the risk of losing out to its international competitors if the government does not tackle fundamental issues such as regulation, energy and credit availability. In a CIA survey of business investment attitudes, 68% of British chemical and pharmaceutical business leaders said they had felt overburdensome regulation in the UK would act as a barrier to further investment. The survey also showed that 53% of those questioned said energy security and price would act as a key barrier, while 37% cited the problem of credit availability.
  
  
• The UK Times Newspaper published the results of a poll on the views of the UK public on climate change. According to the Times, only 41% accept as an established scientific fact that global warming is taking place and is largely man-made. 32% believe that the link is not yet proved; 8% say that it is environmentalist propaganda to blame man and 15% say that the world is not warming.

• The US Chemical Safety Board (CSB) has confirmed that that spilled gasoline vaporised and caused a fire and blast in late October that destroyed more than 10 petroleum storage tanks owned by Caribbean Petroleum in Puerto Rico.