LyondellBasell in talks to buy Braskem with cash, shares

SAO PAULO, (Reuters) - Chemicals company LyondellBasell Industries NV is in talks to acquire control of Brazilian petrochemical firm Braskem SA in a cash and shares deal, two people with knowledge of the matter said.

LyondellBasell and Odebrecht SA, the conglomerate with a controlling stake in Braskem, said in a statement they had entered exclusive talks. They expect to reach a final deal in two months, but there is no deadline yet for a binding proposal, the sources added on condition of anonymity, because they are not authorized to discuss terms of the deal publicly.

LyondellBasell has agreed to extend the same terms of the deal to state-controlled oil company Petroleo Brasileiro SA, or Petrobras, Braskem's No. 2 shareholder, according to the sources. While Odebrecht is angling for a minority stake in LyondellBasell, the deal will be structured so Petrobras may receive an all-cash offer, they said.

Braskem shares soared 19 percent in Sao Paulo on the talks, while Petrobras shares were down nearly 3 percent. LyondellBasell edged nearly 1 percent higher in New York.

LyondellBasell and privately held Odebrecht declined to comment on details of the deal.

"The discussions are preliminary and no agreements have been reached," the two companies said. "There can be no assurance the discussions will result in a transaction or on what terms any transaction may occur."

Petrobras said in a filing it had been informed of talks.

During the exclusive negotiations, LyondellBasell will examine Braskem's long-term naphtha supply contract with Petrobras, which is set to expire in 2020.

Odebrecht recently pledged its 38 percent stake in Braskem as collateral on loans and part of the proceeds from a deal may go to paying debt, so the conglomerate's creditors will have to agree to the sale, the sources said.

In March, Odebrecht reached an agreement with Brazil's two biggest private-sector banks, Banco Bradesco SA and Itaú Unibanco Holding for a 2.6 billion reais loan to repay bondholders and short-term debts.

($1 = 3.78 reais) (Reporting by Tatiana Bautzer and Carolina Mandl; Additional by Laharee Chatterjee in Bengaluru; Editing by Brad Haynes and David Gregorio)