MUMBAI — Indian refining giant Reliance Industries is in talks with stricken US petrochemicals group Lyondell-Basell to buy some of its US assets, a source told AFP on Monday.
The purchase, which would signal the cross-border acquisition market is picking up again after the global financial crisis, is under discussion and might be announced this month, the source said.
"Talks are on at present, but details are to be finalised," the source, who is familiar with the talks, said on condition of anonymity.
The Economic Times newspaper reported that Reliance was planning to make an announcement before its annual general meeting on November 17, with the transaction valued at between 3.35 and 6.0 billion dollars.
The financial daily reported it had consulted bankers and analysts, one of whom said the transaction, if it included European and US assets, could be around six billion dollars.
"Earlier reports had referred to a deal of around 3.35 billion dollars for the company's US assets," the paper said, without giving further details.
Uncertainty caused by the global financial crisis ended almost all cross-border takeovers as companies retrenched and hoarded cash in anticipation of tough economic conditions.
In response to the newspaper report, the company said: "Reliance Industries is reviewing a number of global opportunities for growth in its core business."
Reliance, an index heavyweight, closed up 67.8 rupees or 3.46 percent to 2,024.55 on the Mumbai stock exchange Monday, while the broader 30-share Sensex index was up 2.11 percent at 16,498.72.
The report said Lyondell-Basell filed for bankruptcy protection in the US in January, giving it protection from its creditors and time to restructure its businesses.
In September, Reliance said it raised 660 million dollars through a share sale from its Petroleum Trust unit, which analysts said could be a move to boost its acquisition war chest.
"Acquisitions for Reliance is a logical step. At this stage it is looking at buying out assets rather than building them," said Apurva Shah, head of research with brokerage Prabhudas Lilladher.
Shah said Reliance did not have huge internal spending plans at the moment and so would be financially strong to look for acquisitions.
Reliance, India's largest private company by market capitalisation and sales, had cash reserves of 180 billion rupees (3.8 billion dollars) on 30 September 2009.
Analysts said there were synergies between Reliance and Lyondell. Reliance would benefit from a state-of-the-art technology from Lyondell and the US firm could also emerge as a distributor for Reliance products.
Reliance said quarterly net profit dropped 6.5 percent to 38.52 billion rupees for the three months to September, as core refining margins fell following a tumble in global crude prices.
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