Braskem Buoyed By A Buyout Offer

The climb down from record-high petrochemical spreads in 2021 has been a painful one for Braskem (NYSE:BAK), with the ADRs of this large Brazilian chemical company down over 30% over the past year – worse than peers like Alpek (OTC:ALPKF) and LyondellBasell (LYB). Not only has Braskem taken a hit from higher feedstock prices and higher industry supply, but the company has also seen unhelpful developments in its ongoing Alagoas liabilities and from Brazilian government tax and tariff actions.

As I said back in August of 2021, Braskem shares aren’t a particularly attractive option in the face of weaker spreads and weaker EBITDA, and that’s a situation that could persist for a while longer. By the same token, the shares recently hit decade-plus valuation lows (in terms of forward EV/EBITDA), and this is still a profitable, free cash flow-generating company with a respectable future. While the recently reported bid from Apollo Global Management (APO) isn’t necessarily a blockbuster offer, it could help restore confidence in the long-term outlook for this beaten-down chemicals company.

 

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Braskem Buoyed By A Buyout Offer