Petrobras (PBR) Requests Access to Braskem's Due Diligence Data
Petrobras PBR announced that it has requested access to Braskem's BAK due diligence information. The purpose behind this request is to exercise its preemptive rights for the sale of Braskem’s shares held by Novonor, the controlling shareholder.
PBR clarified that it has not made any decision regarding the divestment process, and is simply exercising its right to access the relevant information. This move followed Novonor’s decision to sell its controlling stake in Braskem, as part of a broader restructuring plan.
Background Details
Petrobras currently owns 36% of Braskem's shares and holds 47% of its voting shares. It has the right of first refusal if Novonor decides to sell its stake to a third party. On the other hand, Novonor, formerly known as Odebrecht, owns a significant portion of Braskem, with a 38% stake that represents 50.1% of the voting shares.
Novonor, together with its creditor banks, is currently in talks to sell most of its stake to Unipar Carbocloro, another chemical company in Brazil. This potential transaction has prompted Petrobras to exercise its preemptive rights and gain access to the due diligence information.
Importance of Due Diligence
Due diligence is a crucial step in the process of evaluating a potential transaction. It involves conducting a comprehensive investigation and analysis of the relevant information related to the transaction.
In the case of Petrobras and Braskem, accessing the due diligence information will allow the former to make informed decisions regarding the possible exercise of preemptive rights for the sale of Braskem shares held by Novonor. By examining the details and assessing the risks and benefits associated with the transaction, Petrobras can better understand the potential impact on its own investment and strategic position.
Petrobras' Rights and Ownership
With a 36% share and 47% voting rights, Petrobras holds a substantial position in Braskem's decision-making process. Additionally, PBR has the right of first refusal, which means that if Novonor decides to sell its stake to a third party, Petrobras has the opportunity to match the offer and acquire the shares. These rights grant PBR a level of control and influence over the potential sale of Braskem shares held by Novonor.
Novonor's Restructuring Plan
Novonor is an engineering and construction company that has been seeking to divest its interests in various sectors. The sale of its stake in Braskem aligns with its strategic goals and allows the company to focus on its core operations. By engaging in the due diligence process and exploring potential buyers, Novonor aims to find a suitable buyer for its Braskem shares.
Impact on Petrobras and Braskem
The due diligence process and the potential sale of Braskem shares held by Novonor can have a significant impact on both Petrobras and Braskem. For PBR, the exercise of preemptive rights provides an opportunity to strengthen its position in Braskem and safeguard its influence in the company's decision-making process.
Braskem, on the other hand, could experience changes in its ownership structure, leading to shifts in strategic direction and corporate governance. The transaction, if completed, would mark a milestone in the development of Brazil’s petrochemical industry.
Zacks Rank and Key Picks
Currently, PBR carries a Zacks Rank #3 (Hold) and BAK holds a Zacks Rank #2 (Buy).
A couple of better-ranked stocks for investors interested in the energy sector are Evolution Petroleum EPM, sporting a Zacks Rank #1 (Strong Buy), and Murphy USA MUSA, carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evolution Petroleum is worth approximately $265.15 million. EPM currently pays a dividend of 48 cents per share, or 6.02% on an annual basis.
The company currently has a forward P/E ratio of 7.59. In comparison, its industry has an average forward P/E of 10.60, which means EPM is trading at a discount to the group.
Murphy USA is valued at around $6.64 billion. In the past year, its shares have risen 14.3%.
MUSA currently pays a dividend of $1.52 per share, or 0.50% on an annual basis. Its payout ratio currently sits at 6% of earnings.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Petroleo Brasileiro S.A.- Petrobras (PBR) : Free Stock Analysis Report
Braskem S.A. (BAK) : Free Stock Analysis Report
Murphy USA Inc. (MUSA) : Free Stock Analysis Report
Evolution Petroleum Corporation, Inc. (EPM) : Free Stock Analysis Report
