June 4, 2019 / 11:21 AM / 21 days ago

UPDATE 2-LyondellBasell ends talks with Odebrecht to buy Braskem

(Adds Braskem shares falling, context on leniency fines)

June 4 (Reuters) - Shares in petrochemical producer Braskem were down 20 percent in pre-market trading in Sao Paulo after petrochemical giant LyondellBasell Industries NV on Tuesday said it had ended talks with Braskem SA’s controlling shareholder, Brazilian construction conglomerate Odebrecht SA, to acquire the company.

Reuters reported in March that talks with Brazilian conglomerate Odebrecht SA over a potential $11 billion deal for Braskem had slowed due to issues linked to a delayed U.S. filing and a supply contract for naphtha with Petrobras.

In May, Braskem said its U.S.-listed shares would be delisted by the New York Stock Exchange after it failed to file its 2017 annual report on time.

Lyondell’s board had decided that it would not conclude the deal before Braskem files its 2017 20F annual report with the U.S. Securities and Exchange Commission, one source previously told Reuters.

Last week, Braskem announced it had to pay additional leniency fines to Brazilian authorities. Brazil’s federal auditor and controller’s office said on Friday Braskem had agreed to pay 2.87 billion reais ($733 million) by 2025 in a leniency deal to settle corruption charges.

The company already had paid 1.33 billion reais of the fine to federal prosecutors..

Odebrecht, which has been trying to restructure after being implicated in Brazil’s sweeping “Car Wash” scandal, had been discussing the deal with Lyondell for more than a year and a half.

The end of the talks to sell Braskem, Odebrecht’s crown jewel, complicates the restructuring efforts of the highly indebted conglomerate. Two of its units, Odebrecht Engenharia e Construcao, and ethanol unit Atvos, are already restructuring debt. Atvos has filed for bankruptcy protection last week.

LyondellBasell said it ended talks with Odebrecht SA “after careful consideration” but did not elaborate further.

Shares of LyondellBasell were up 2.3% at $79.50 in premarket trading. (Reporting by Debroop Roy in Bengaluru and Tatiana Bautzer in Sao Paulo; Editing by Shailesh Kuber and Bill Trott)

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