Saturday, May 14, 2005

Basell: Faulty but inevitable

Back in the land of broadband, and I find that BASF and Shell have decided to bow to pressure from the Whitehouse and sell Basell to the Halida consortium instead of NPC of Iran. At this level decisions are politcally driven, but, thinking simply in terms of business logic this is a wasted opportunity for both of the parents.

European Chemcial New's take on the deal was summed up as:

Shell and BASF are selling their Basell polyolefins joint venture for €4.4bn to financial buyers Access Industries and The Chatterjee Group (TCG), both based in the US.

A deal was signed last Thursday after pressure from the US prevented a sale being concluded with NPC of Iran, which had been the lead bidder until the final phases. The individual participations of Access and TCG in the consortium were not disclosed.

Nigel Davis' Chemical Insight

The Basell sale has mirrored great shifts in petrochemicals that are revealing the growing importance and ambitions of producers in the Middle East and Asia alongside the shifting focus and retrenchment of the world’s major established producers.

A great pity, but the opportunity came at the wrong time for the Iranians given the US' Administration's current frame of mind. Don't rule them out. It will take time for the Iranians to build into the petrochemcials powerhouse that they are likley to be. See earlier comments about handbags and cravats.

Basell's new owners will be running the business for cash, since a large part of the deal has been debt funded. Paying this off will be important, and we may see a listing in the US after the deal closes in July.

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