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. (NYSE: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: