The Abu Dhabi National Oil Company (ADNOC) has made a surprising decision by backing away from acquiring Novonor’s controlling stake in Braskem, a Brazilian petrochemical giant. This unexpected move has had a significant impact on Braskem’s share price, causing it to plummet by nearly 15 percent.
ADNOC’s withdrawal from the deal comes after extensive negotiations and due diligence on Braskem. Initially, ADNOC, in partnership with U.S.-based manager Apollo, made a purchase proposal a year ago. However, even after reiterating a non-binding offer of BRL 10.5 billion (USD 2.1 billion) to control Braskem in November, ADNOC has decided to step back from the deal.
Novonor, formerly known as Odebrecht, is an infrastructure group that currently holds 50.1 percent of Braskem’s ordinary shares and 38.2 percent of its total capital. Selling its stake in Braskem is crucial for Novonor’s financial recovery, especially after being embroiled in Brazil’s largest corruption scandal.
Despite being the largest petrochemical company in Latin America, Braskem is facing significant liabilities, including its involvement in an environmental tragedy in Brazil’s Northeast region. This tragedy, as revealed in an investigative report by The Brazilian Report, resulted from Braskem’s salt mining activities, leading to the collapse of buildings and displacing thousands of residents.
Efforts are underway to compensate the affected populations and stabilize the region. However, ongoing legal battles and compensation disputes continue to overshadow Braskem’s future.
In addition to ADNOC, other companies like Unipar and J&F Investimentos have also expressed interest in acquiring Braskem’s control. Meanwhile, Petrobras, with a minority stake in Braskem, is exploring new partnership opportunities for the management of the company.