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24 Nov 2009 15:24

RIL hires Ciba-Sandoz advisor Perella for LyondellBasell buy

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Price when posted : BSE: Rs 2175.80 ( -0.90 % ), NSE: Rs. 2175.30 ( -0.90 % )

Reliance Industries (RIL) has hired advisory boutique Perella Weinberg Partners, founded by Joseph Perella who had advised on Ciba Gang of Five behind LyondellBasell bid
RIL`s LyondellBasell bid
RIL Stock

Geigy-Sandoz merger and America Online�s purchase of Time Warner, to guide it on LyondellBasell stake buy, two persons familiar with the development told ET. ( Watch )

Perella Weinberg Partners was founded in 2006 by Mr Perella, a former Morgan Stanley Vice-Chairman, and Peter Weinberg a veteran Goldman Sachs investment banker. Prior to the venture, Mr Perella partnered the late Lazard CEO Bruce Wasserstein.

Reliance, the nation�s biggest company, on Saturday said it had submitted an all-cash but non-binding to buy a controlling interest in LyondellBasell if it emerges out of bankruptcy. Although the company had not disclosed the potential value of the bid, sources and analysts expect it to be around $12 billion in enterprise value. Enterprise value is calculated as equity value plus debt, minority interest and preferred shares, minus total cash and cash equivalents.

Mukesh Ambani is in the US to oversee the developments of the takeover. A top functionary in the petroleum ministry, who did not wish to be quoted given the sensitive nature of the deal, said that Mr Ambani, who is likely to be in Washington later on Monday night as a member of the Prime Minister�s business delegation, is �confident and keen on the acquisition.�

�So far RIL has concentrated on building greenfield projects and has used execution skills to rake in significant returns which have been upwards of 20% on average. This perhaps is beginning to change,� said an investment banker who worked with RIL on earlier acquisition proposals.
Mr Ambani, at the company�s annual general meeting on November 17, had articulated the company�s intent to expand inorganically through mergers and acquisitions. �It is about getting over the mindset of high returns and moving towards a more global representation,� he said.

Mr Ambani�s close aide Manoj Modi and the recently-appointed executive director R Ravi Mohan, a former head of a the credit rating agency Standard & Poor�s in India, are spearheading the deal, a person working on the deal said.
The Netherlands-based LyondellBasell, the world�s third largest petrochemical company is present in 19 countries, with 63 manufacturing facilities and 25,000 employees. RIL, which put in a non-binding offer will now seek to get reorganise the outstanding debt of the bankrupt company.

�The fact that the whole bidding process is now in public domain, is expected to stimulate more competition which could get a better price for the debtors,� an investment banker said.

RIL�s offer is an alternative to a reorganization plan put in by private-investment firms including Apollo Management, Ares Management and Kohlberg Kravis Roberts that would hand LyondellBasell to senior lenders in exchange for canceling much of their debt. That plan includes a $2.5 billion rights offering to take the company out of bankruptcy, media reports said...

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