Lyondell Takeover Pushes Nova Chemicals Buyout Target to US$53

Nova Chemicals Corp. (NCX), which has seen its shares climb roughly C$5 in the past month, climbed again on Tuesday after Lyondell Chemical Co. (LYO) received a US$12.1-billion cash offer from its Dutch rival Basell.

Shares of other petrochemical producers like Dow Chemical Co. (DOW), also jumped on the transaction.

Private equity group Harbinger Capital’s disclosure that it has acquired a 6% stake in Lydondell serves as a recognition of value in the sector, Canaccord Adams analyst Bob Hastings said in a research note. This could fuel takeover speculation, and boost share prices across the sector.

He continues to rate Nova Chemical shares a “buy” with a US$50 price target, which does reflect some potential for a takeover. However, he thinks a buyout would come in at US$53 per share given recent transactions, or higher if a bid is based on rising replacement costs.

NCX 1-yr chart: