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Basell Holdings (BF) Buying Out Lyondell (LYO)

by Beth Gaston Moon (bgmoon@sir-inc.com) 7/17/2007 12:33 PM

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Lyondell Chemical (LYO: sentiment, chart, options) is among the day's best performers, spiking 16.5% higher to peg a new all-time high. This morning, Basell Holdings (BF: sentiment, chart, options) announced plans to acquire Lyondell for $12.66 billion, or $48 per share. This represents a 20% premium over LYO's closing price yesterday. The deal's total value, including assumed debt, weighs in at $19 billion. The partnership with Lyondell is expected to close in the next several months. In 2006, the combined company would have posted overall revenue of $34 billion.

Basell has found comfort in Lyondell after its $5.6 billion buyout offer for Huntsman (HUN: sentiment, chart, options) was rejected last Thursday in favor of a more lucrative offer from Apollo Management LP. In May, BF lost an effort to acquire General Electric's (GE: sentiment, chart, options) plastics business. Goldman Sachs has given the merger its vote of confidence, calling it a "good deal for [Basell] as they finally get what they want."

BF shares are moving higher today as well, as they finally found a willing acquisition target. The stock is currently up 0.6%, but has registered a new all-time high. Other names in the chemical sector, including DuPont (DD: sentiment, chart, options) and Dow Chemical (DOW: sentiment, chart, options) , have joined the party and are rallying in sympathy.

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