Abu Dhabi’s International Petroleum Investment Co. is taking over debt-squeezed plastics maker Nova Chemicals Corp. in a friendly deal worth $2.3 billion US.
IPIC, owned by the government of Abu Dhabi, the second most populous city in the United Arab Emirates, said yesterday its $6 US per share cash offer is more than four times Nova’s stock price on Friday.
Carl Blake, an analyst for corporate bond research firm Gimme Credit, said the deal is a “far cry” from the replacement value of Nova’s plants
“That suggests that the situation was fairly dire and it was a prudent move for them to take advantage of the opportunity,” he said.
Nova shares reached a new low this month as traders assessed heavy losses and looming debt deadlines in a deepening recession, trading as low as $1.38 from around $30 last September. But sales of Nova’s main product, polyethylene, have been resilient.