Investors woke up on Tuesday to see the shares of petrochemical company Braskem melting nearly 20 percent after merger talks with LyondellBasell collapsed. But why exactly did the Dutch company give up on an acquisition that would transform it into the global leader of thermoplastic resin? The answer lies in the financial woes of Braskem’s controllers, a disaster in the state of Alagoas and trouble with American securities authorities.
It has been almost a year since exclusive negotiations started. At that time, Braskem shares listed on the São Paulo stock exchange (BRKM5) had their best performance ever in a single trading session, rising 21.4 percent. The deal, at first, meant a win-win situation for both Lyondell and Braskem’s controllers: Brazilian construction group Odebrecht and the state-owned oil giant Petrobras.
Petrobras and Odebrecht were desperately trying to reduce their debts. After being involved in Operation Car Wash scandals and slapped with hefty fines, both companies came up with debt restructuring plans, aiming to get rid of non-essential assets—such as their...
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