RIL to have limited benefits from LyondellBasell takeover: S&P

NEW DELHI: Standard & Poor's said acquisition of the Netherlands-based LyondellBasell Industries will provide limited benefits to Reliance Industries (RIL).

"Although Standard & Poor's acknowledges that the transaction could bring some strategic benefits, it believes synergies would be limited," the global rating agency said.

RIL has submitted a preliminary non-binding offer to acquire, for cash, a controlling interest in LyondellBasell (LBI), a backward-integrated commodity chemical producer.

The consolidated financial metrics of India's largest private company could weaken over the next 12 months if it proceeds to acquire the Dutch petrochemical player, it said.

"The negative rating outlook on our rating for Reliance Industries also factors in the relatively weak global economic environment ... (and) the uncertainty over the size of the cash flow contribution to the company from gas production due to legal disputes with Reliance Natural Resources," it said.

Domestic rating agency Crisil has reaffirmed its ratings on the debt instruments and bank facilities of RIL following RIL's announcement of its acquisition proposal.

Crisil's reaffirmation is based on assumptions, after discussions with RIL, that acquisition would be funded without any debt and LBI would have a conservative capital structure.

"Existing cash and sale of treasury stock will be used for the purpose of funding the acquisition ... LBI's gross debt to equity ratio will not exceed 0.75 times," it assumed.