Odebrecht and Petrobras have recently changed the shareholders' agreement of Braskem to allow Petrobras to sell, along with Odebrecht, its participation in the petrochemical company. The change is seen as a signal that Petrobras will indeed sell its part and follow through with its plan to divest from segments different from oil and energy.

Braskem is the largest producer of thermoplastic resins in the Americas and the largest producer of polypropylene in the United States. It is a publicly listed company, whose 38.3% of capital belongs to Odebrecht and 36.1% to Petrobras. Both Odebrecht and Petrobras have recently been hard hit by one of the largest corruption investigations in the history of Brazil, which unraveled an intricate scheme of bribery and money laundering in which both companies were largely involved. Having lost a large share of its market value, as well as its credibility, both companies have adopted a restructuring plan that involves divestment and sale of assets.

In February, Odebrecht started to negotiate the sale of Braskem with the Dutch transnational LyondellBasell. In June, they signed an exclusivity agreement for the talks, which expires in the end of October. According to the shareholders' agreement, Petrobras can either make use of its preference in the purchase of Braskem, or exercise its right to tag along, which after the recent change in the shareholders' agreement, applies not only to ordinary shares but also preferential shares.

Since Petrobras is one of the majority shareholders of Braskem, most of the inputs used in Braskem’s production comes from Petrobras, which might change in case the sale is concluded. Brazilian imports of inputs for the petrochemical industry, such as ethylene, propylene, and others, are likely to increase, which creates export opportunities for producers of such products. In 2017, the UAE exported US$ 2.5 million in products of HS category 2901, which includes ethylene, propylene, and others, but none of these exports had Brazil as a destination. Brazil’s total amount of imports in that same category reached US$ 63 million in 2017.

Source: Valor Econômico, O Globo and Dieese (Interunion Department of Statistics and Economic Studies)