RELIANCE INDUSTRIES POTENTIALLY ACQUIRES LYONDELLBASELL AMIDST RECESSION LED PURCHASE PRICE

The potential purchase of a controlling stake in LyondellBasell Industries AF, the world’s third largest petrochemical company, by Reliance Industries Ltd, India’s largest company by market capitalization, marks a return to multi-billion dollar overseas acquisitions by cash-rich Indian companies tempted by depreciated asset prices of companies affected by the biggest worldwide recession since the Great Depression. If successful, it could make Reliance Industries India’s first company to have a market value greater than $100 billion.

Indian companies with a war chest of cash reserves include the Oil and Natural Gas Corporation Limited (ONGC), India’s state owned petroleum company, with reserves of about $5 billion; Reliance Industries with reserves of $4.2 billion and Tata Sons, the holding company for all Tata Group’s investments, with about $640 million .

Indian companies are on the hunt for bargain basement prices overseas. This is a good time for them to buy market share and customers in the West at fraction of what they would have paid a couple of years ago.

After a lull of about 18 months, Indian companies have aggressively started looking at foreign assets again. During that time, western economies dipped to low single-digit GDP growth and unemployment surged into double digits amidst the worst banking industry led financial crisis in decades. By contrast, the Indian economy continues to grow at nearly 7% annually amidst growing consumer demand and a robust banking system.

The fear that India’s economy might follow the West into a recession is over. That’s giving Indian companies the confidence to go hunting again in overseas markets where the recession gives them one-in-a-lifetime opportunities to acquire depressed assets.

LyondellBasell, based in Rotterdam in the Netherlands, sought bankruptcy protection early this year after demand for its plastic products plunged last year.

The acquisition of LyondellBasell by Reliance is expected to be India’s biggest cross-border deal this year, on par with the acquisition of the U.K.’s top steel maker Corus Group Plc for $12 billion by India’s Tata Steel Ltd in January 2007. Indian M&A activities peaked in 2007 with more than $51 billion worth of transactions.

India has been host to 234 M&A deals amounting to only about $8 billion during the first 10 months of this year, less than a third of that in the corresponding period in 2008.

The $100 Billion Club
The Reliance – LyondellBasell combine will accelerate Reliance into the elite league of companies worldwide that have a market capitalisation of more than $100 billion (Rs 460,000 crore). The combined entity will have potential consolidated revenue of more than $85 billion, transcontinental presence across more than 60 facilities and 60,000 people. Reliance Industries currently has a market value of about $75 billion.

The Indian companies are buying international scale and growth not only in developing economies, but to compete in developed economies as well. Reliance’s acquisition of LyondellBasell will mark India’s entry in the international petrochemical industry, just as previous years saw India Inc. buy into international steel, auto and IT industries.

Indian oil companies are stepping up overseas purchases as shrinking profit margins have prompted international refiners to idle and sell plants. Crude oil currently trades at about half its record $147.27 a barrel in July 2008.

Essar Oil, India’s second-largest private refinery is currently in talks to buy three refineries in the U.K. and Germany from Royal Dutch Shell Plc. Oil & Natural Gas Corp., India’s biggest energy explorer, completed a 1.4 billion-pound ($2.3 billion) acquisition of Imperial Energy Plc in March.

RELIANCE OFFERS TO BUY LYONDELL FOR OVER $12 BLN

India’s Reliance Industries is offering about $12 billion to buy a controlling interest in bankrupt chemical company LyondellBasell Industries to create one of the largest petrochemical firm in the world, two sources with direct knowledge of the deal said.

“The offer is in the vicinity of about $10 to $12 billion,” one source said, while another said it was around the upper end of the band. The two sources declined to be named as they are not authorised to speak to the media.

The deal, if closed, will make it one of the largest overseas acquisitions by an Indian company. In 2007, Tata Steel bought Anglo-Dutch Corus steel maker for $13 billion.

On Saturday LyondellBasell said Indian energy giant Reliance Industries has made a non-binding cash offer to buy a controlling interest and the offer represented a potential alternative to its previously filed reorganisation plan to emerge from Chapter 11 bankruptcy.

Reliance said it had made a preliminary non-binding offer to acquire, for cash, a controlling interest in LyondellBasell upon its emergence from Chapter 11.

Reuters/Livemint

TOP-10 COS ADD OVER RS 1.42 LAKH CR

India's top-10 firms added Rs 1,42,000 crore to their market capitalisation last week with country's most valued firm, Reliance Industries crossing Rs 3 trillion mark after two weeks.

The country's most-valued firm, Reliance Industries Ltd, added Rs 24,395 crore to its market valuation taking its total market cap to Rs 3,04,292 crore. Shares of RIL surged nearly 9 per cent on the Bombay Stock Exchange (BSE) to end the trade at Rs 1,933.40 on Friday...

The Financial Express

INDIA'S BILLION DOLLAR CLUB ADDS 51 FIRMS; $500 BILLION

The rally in the stock market and the recent appreciation in rupee value has brought 51 new members to the elite billion-dollar market-value club, while doubling its overall valuation since October when the benchmark index had dropped below the 8,000-level.

The country boasts of as many as 144 companies with a market capitalisation of at least a billion dollar at present. The number represents a increase of 51 companies from just 93 in October 2008. Interestingly, the cumulative market value of the club currently stands at about 900 billion dollars (Rs 42,34,171.25 crore) as on June 5, more than double of its value in October last year of 410 billion dollars (about Rs 20,41,029.8 crore).

The Economic Times

47 INDIAN COS AMONG FORBES GLOBAL 2000 LIST

As many as 47 Indian companies, led by corporate behemoth Reliance Industries and the country's biggest lender, State Bank of India, have made it to the list of world's biggest 2,000 companies by US magazine Forbes.

The Economic Times

BRAND POWER: RIL KING OF BRANDS AT $6.8 BN

India’s trillion-dollar plus stock markets boast of 20 companies with a brand value of over $1 billion, up from 16 last year. There are now a dozen (BSE-listed) companies with a brand value over $2 billion (vis-à-vis nine last year) and half-a-dozen with over $3 billion (up from four last year). Raise the cut-off to $6 billion, and it’s a club-of-one, India’s biggest private-sector company, Reliance Industries, with an end-2007 brand value of $6.81 billion (Rs 26,801 crore) vis-à-vis $5.8-billion in end-2006.

The Economic Times

ANIL AMBANI's PAY PACKET FATTENS SIX-FOLD

Consumers may be reeling under an inflation of close to 13 per cent, but it should not be a cause of concern for India's second richest person Anil Ambani, whose pay package has grown by close to six times over past fiscal.

The Financial Express

GREENBACKS POWER COMPANIES INVESTING IN RENEWABLE ENERGY

With oil prices ruling high despite recent correction, domestic companies such as Reliance Industries (RIL), Tata BP Solar, Essar Power, Suzlon and Moser Baer are investing more in renewable energy. While Suzlon, Moser Baer, Indowind and Webel raised $1.4 billion overseas in 2007 through convertible bonds for investment in green energy, RIL, Tata BP Solar and Essar Power raised $628 million on domestic stock exchanges in 2007

The Economic Times

RIL, Reliance Cap among Asia's 20 best for future investor returns

Seven Indian firms, including Reliance Industries and Reliance Capital from the two Ambani groups, have been named among Asia Pacific's 20 best companies in terms of expected investor returns over next five years.

The Economic Times
http://economictimes.indiatimes.com/Market_Analysis/
RIL_Reliance_Cap_among_Asias_20_best_for_future_investor_returns/
articleshow/2812588.cms

Mukesh trails Anil in creating wealth for investors

Mukesh Ambani, the richest Indian and head of market leader Reliance Industries Ltd, was not the leading wealth creator for small investors in 2007 but was pipped for the top spot by younger brother Anil. A comparison of cumulative share price gains for the listed companies from the two groups puts the surge for Mukesh Ambani group at 153 per cent, as against about 232 per cent for the Anil Dhirubhai Ambani Group (ADAG).

The Economic Times
http://economictimes.indiatimes.com/
Mukesh_trails_Anil_in_creating_wealth_for_investors/
articleshow/2650121.cms

Tatas India’s second most valued group

Leading conglomerate Tata group has retained its position as India’s second most-valued and the only corporate house after Mukesh Ambani group with a market value of over Rs 3 trillion, despite the Anil Ambani group hitting this milestone in intra-day trades twice. Tatas are the biggest corporate house among the three in terms of the number of Companies listed on the bourses. Besides, Tata group also has the lowest average promoter holding among the three leading business groups, while Anil Ambani group has the highest. The cumulative market value of all the 30 listed firms of Tata group currently stands at Rs 3,04,473 crore, based on their BSE share prices at the close of the market on Friday.

The Financial Express
http://www.financialexpress.com/news/
Tatas-Indias-second-most-valued-group/251092/