RIL engaged hundreds of people for due diligence: Lyondell
Prress Trust of India / New York Mar 10, 2010, 17:34 IST
In its multi-billion-dollar acquisition pursuit for LyondellBasell, the Mukesh Ambani-led Reliance Industries engaged 'hundreds' of advisors and personnel to access thousands of documents related to the proposed deal, which was rejected by the Luxembourg-based bankrupt chemicals major.
LyondellBasell rejected RIL's offer, estimated to be worth over $14 billion, citing that its own restructuring plan to exit bankruptcy was 'superior' to the RIL offer.
According to a court filing, LyondellBasell offered RIL an opportunity to undertake an "extensive due diligence" of the company.
"LyondellBasell constructed an electronic data room for Reliance, which provided access to thousands of documents. Hundreds of Reliance's advisors and personnel accessed this data room.
"LyondellBasell and its advisors also received and addressed requests for more than 1,000 items from Reliance and its advisors," document filed with the US bankruptcy court said.
In the three months since RIL made the initial bid in November 2009, the filing said LyondellBasell and its advisors made "full teams available to guide in-person visits to over 20 of the company's key facilities worldwide" and also dedicated three full days of management time for face-to-face presentations and question and answer sessions.
Further, two additional days were spend for due diligence sessions with RIL's proposed funding banks and there were also many other meetings and telephone calls with the Indian firm and its advisors.
Reliance had initially made an unsolicited, non-binding offer to buy a controlling stake in LyondellBasell in November last year.
In the first instance, RIL offered about $12 billion but subsequently revised it to $13.5 billion in January and a month later further raised it by $1 billion.
Going by the filing, LyondellBasell's debtors had some concerns about the RIL proposal including its insistence on having effective governance and shareholder control over the company, "even if it owned a minority of its equity and did not pay a premium for that control".
Other concerns were about the dilutive effect of the purchase price associated with the proposed direct equity investment by RIL and the potential delay and associated costs that would attend pursuing am RIL offer.
"Reliance’s dependence on speculative and disputed future profit opportunities to argue that its proposal represents increased value, even though it had not proposed that it would monetise any of that future value for current creditors," was also cited as a concern by the LyondellBasell's debtors.
"After deliberate consideration, it was determined that LyondellBasell's amended plan is superior to the Reliance proposal, and that proceeding with this plan is in the best interests of creditors and the estate," LyondellBasell spokesperson David Harpole had said.
Noting RIL had revised its offer twice since the first offer last November, Harpole had said RIL made over 20 visits to the LyondellBasell facilities during the due diligence process.
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