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Petrobras conducting due diligence on Braskem to exercise "tag along" or preferential acquisition rights; Apollo fund reportedly leaves negotiations

September 20, 2023 – The state-owned Brazilian oil company, Petrobrás, confirmed last September, 18, that it is conducting due diligence on Braskem for the possible exercise of tag along rights or preferential acquisition rights, in the event of sale of shares held by Novonor in the company, as per rules provided for in the Shareholders Agreement signed between Petrobras and Novonor.

The company officially informed that there was no decision made by the Executive Board or the Board of Directors regarding the matter yet.

Sources cited by Brazilian business newspaper Valor mentioned that the U.S.-based asset manager fund Apollo Global is no longer taking part in the simultaneous negotiations to purchase Braskem. Valor learned that the Abu Dhabi National Oil Company (ADNOC), which had joined Apollo in a proposal to acquire the whole petrochemical company, is advancing by itself in the talks. According to Valor, the Brazilian government and Petrobras wanted Apollo to leave. The fact that ADNOC is also a state-owned company is welcomed by Petrobras and the current left leaning government, which had already signaled that it does not have favorable views about the transfer of such "strategic asset" to a foreign financial investor, the newspaper says.

Sources say ADNOC is working to to purchase Novonor’s stake at Braskem and establish a joint venture with Petrobras, with around 50% for each. The Brazilian oil company currently owns 36.1% of Braskem, with 47% of the capital with voting rights. Novonor (former Odebrecht) has 50.1% of common shares and 38.3% of the company’s total capital.

Last Sunday, Lauro Jardim, a jornalist from O Globo newspaper, wrote in his column that Petrobras already chose the offer presented by ADNOC as the most suitable for the company and informed its decision to President Lula da Silva.

Apollo and ADNOC declined to comment on the subject.

Brazilian companies Unipar and J&F Investimentos also made offers to acquire Novonor´s shares in Braskem some months ago. Until now, no final decision has been taken by Novonor on the issue.

Source: Petrobras, Valor, O Globo