Reliance Industries' bid for bankrupt LyondellBasell Industries AF would give India’s biggest company a low-priced US Refinery, mimicking successful strategies by Valero Energy Corp and the former Tosco Corp.
The Mumbai-based refiner and energy explorer led by billionaire Mukesh Ambani offered about $12 billion on Nov 21 to buy a controlling stake in the Rotterdam-based chemicals and fuels maker, said two people familiar with the matter. The purchase would include LyondellBasell’s Houston refinery.
Refinery values tumbled after the worst global recession since the Great Depression cut gasoline and diesel demand in the world’s largest fuel market, creating circumstances similar to the late 1980s and early 1990s when Tom O’Malley built Tosco by buying lower-priced plants. Bill Greehey also made opportunistic acquisitions, helping Valero become the biggest U.S. Refiner.
"It’s a buyer’s market, and that’s the same market O’Malley and Greehey used when they created Tosco and Valero," said Ann Kohler, an analyst at Caris & Co. In New York.
San Antonio-based Valero, Sunoco Inc. Of Philadelphia and Western Refining Inc. Are closing unprofitable plants to stem losses. Holly Corp. Agreed last month to buy Sinclair Oil Corp.’s Tulsa, Oklahoma, refinery for $128.5 million, less than half the total Sinclair spent to upgrade the plant.
