Reliance Said to Have No Plans to Raise Lyondell Bid

March 4 (Bloomberg) -- Reliance Industries Ltd. has no plans to increase its bid for bankrupt chemicals maker LyondellBasell Industries AF after creditors rejected a $14.5 billion offer, two people briefed on the matter said.

Market conditions didn’t justify raising the offer further, the people said yesterday declining to be identified because they aren’t authorized to speak to the media. Chairman Mukesh Ambani, Asia’s richest man, may be prompted to spend Reliance’s $3.5 billion of cash elsewhere, analyst Victor Shum said.

“Paying any more than Reliance have offered makes the deal unattractive,” Shum of energy consultants Purvin & Gertz Ltd. said by telephone from Singapore today. “Lyondell would have given Reliance assets outside India and access to its marketing network in the U.S., but Reliance already markets globally and the synergies between the two companies are not that great.”

The Mumbai-based oil refiner and explorer’s shares have climbed 4.7 percent this week after its bid was rejected for a second time this year. Reliance is seeking asset abroad to reduce the risk of investing mostly in India, where it is battling a lawsuit over natural-gas supplies with a company owned Mukesh’s estranged brother, Anil Ambani.

Alok Agarwal, chief financial officer at Reliance couldn’t be reached at his office after hours.

Rising crude oil prices coupled with weak global demand for fuels and chemicals are prompting companies to sell assets.

Bid History

Rotterdam-based LyondellBasell had earlier rejected a revised Reliance bid that valued it at $13.5 billion, the Wall Street Journal reported Jan. 8. India’s largest company by market value had raised its offer for a controlling stake to $14.5 billion, two people with knowledge of the offer said on Feb. 22. The company initially offered an undisclosed amount on Nov. 21 and has yet to make public the value of its bid.

Oklahoma-based Devon Energy Corp., the biggest independent U.S. oil and gas producer, on Nov. 16 announced it was putting oil blocks from the Gulf of Mexico to the Caspian Sea up for sale to raise $7.5 billion to cut debt and fund onshore developments.

Houston-based ConocoPhillips plans to sell $10 billion of assets in two years to cut debt that may include exploration and production holdings in North America and gas properties in the North Sea, Chief Executive Officer Jim Mulva said in October.

‘Global Footprint’

Reliance operates India’s biggest natural gas field, owns the world’s largest refining complex at Jamnagar in Gujarat state, and has cash holdings of 160 billion rupees ($3.5 billion). While it has interests in overseas oil blocks, including in Peru, Iraq and Australia, only one in Yemen is producing at 4,400 barrels a day, according to Reliance’s earnings statement for the three months ended Dec. 31.

Reliance seeks a “far more widespread global footprint” in the near term, Ambani told shareholders Nov. 17. The company may buy oil fields in the Gulf of Mexico and Brazil to hedge the risk of investing mainly in India, P.M.S. Prasad, president of its oil and gas business, said Sept. 14. In December, Reliance hired Walter van de Vijver, a former exploration chief at Royal Dutch Shell Plc, to head its overseas business.

“Reliance has a very strong position in India but it doesn’t internationally,” Nathan Schaffer, an analyst at PFC Energy, said by phone from Houston. “There will be plenty of opportunities to pick up some attractive assets.”