Chatterjee Group pulling out of Basell deal-paper

MUMBAI/FRANKFURT— The Chatterjee Group is pulling out of a 4.4-billion-euro ($5.25-billion) deal to buy the Basell plastics joint venture of Royal Dutch/Shell RD.AS SHEL.L and BASF BASF.DE, the Times of India reported yesterday.

By (Reuters)

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Published: Thu 7 Jul 2005, 10:19 AM

Last updated: Thu 2 Apr 2015, 4:37 PM

The private U.S.-based investment firm headed by Purnendu Chatterjee is ”reluctantly” pulling out because of its inability to buy out West Bengal state’s stake in polymer maker Haldia Petrochemicals Ltd. (HPL), the proposed vehicle for the purchase in which Chatterjee has a controlling stake, the newspaper said. The other party involved, Access Industries, would go ahead with the deal, Chatterjee was quoted as saying. The BASF spokesman said his company expected the sale to go through.

“We have a clear agreement with the buyer of Basell, who operates under the name Nell Acquisition,” he said. “Nell has the necessary capital to take over Basell and we expect the agreement to be kept,” the spokesman added.

BASF shares were up 0.44 per cent to 55.11 euros, and Shell was up 1.11 per cent to 570 pence in London.

BASF and Shell announced in May that they were selling Basell to New York-based Access Industries and The Chatterjee Group for 4.4 billion euros ($5.23 billion). Analysts said that Chatterjee’s pullout would lead to a delay of a couple of months, and possibly a reduced sale price. “If the report proves to be true, the whole deal could fail. Nevertheless in our view, this should most probably mean only a delay for a couple of months,” said Dresdner Kleinwort Wasserstein in a note. “In the course of the bidding process many parties were involved in the auction process including industrial and financial buyers, so we would expect refreshed interest in the group soon,” it said.

The bank added the risk was a slightly lower sale price. “The Basell deal cannot wait indefinitely till HPL comes under the control of TCG. The opportunity for Basell takeover cannot be lost on account of delay in the share acquisition process of HPL. European laws are strict about it,” the newspaper quoted Chatterjee as saying.

“The financial closure for Basell has been pegged during the second half of current fiscal and the delay in acquiring the state government’s shares cannot hold back the schedule,” he told the newspaper, adding he had no option but to ”de-link” from the Basell acquisition process. A senior official of the West Bengal government said the government did not want to be part of the Basell deal because it was not interested in buying shares in a foreign company. “We are not portfolio investors, it makes no sense for any state government,” said the official, who declined to identified. He said Chatterjee was still quite keen to buy out the government’s stake and that Haldia was looking to get about 15 billion rupees ($345 million) for 520 million shares in Haldia.

The sale was being held up because Chatterjee needed the money for the deal and he also needed clearances from lenders and the Reserve Bank of India, which were still awaited, he said. “My hunch is that the Basell deal will still go on. For the time being, Access will buy out Basell through a special purpose vehicle and once the clearances are obtained, the Chatterjee group could be inducted into it,” he said. Chatterjee is obtaining clearances for the buyout of the state’s stake in Haldia, but could not specify a time frame by which the deal would be complete, the Times of India said. If the Chatterjee group managed to buy the state’s Haldia stake, it “will have to re-look into the matter at that point of time”, the paper quoted Chatterjee as saying.

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