BASF SE cannot withdraw from partnership involved in the 2007 buyout of Lyondell Chemical Co. by Access Industries

05-Mar-09

As per a court ruling, BASF- world number one chemical producer cannot pull out of a partnership involved in the 2007 buyout of Lyondell Chemical Co. by Access Industries Holdings. A judge in Delaware has discarded a suit by BASF over a Texas chemical plant it owned in partnership with an entity controlled by Lyondell. A unit of Access bought Lyondell for about US$13 bln in November 2007 to form LyondellBasell Industries, one of the world’s largest plastics makers. BASF has argued the acquisition triggered a buyout clause in its venture involving the plant. BASF’s US unit owns the Channelview, Texas, plant along with an entity controlled by Lyondell, producing propylene oxide. BASF said the partnership agreement allows it to pull out if Lyondell or one of its units no longer operates the facility, arguing that Access’s purchase of Lyondell triggered the buyout. “The plain language of the withdrawal provision does not entitle BASF to have its interest bought out simply because Lyondell has experienced a change of control,” as per the court ruling. It has been found that BASF couldn’t produce any evidence to show Lyondell officials had ceased overseeing the plant since the buyout. He also found that the change of control didn’t change operational procedures at the facility. This ruling coincides with Houston-based Lyondell seeking to reorganize in bankruptcy court triggered by drastic deterioration of demand globally.