NEW YORK ( The Deal) -- Apollo Management Holdings extracted another $1.1 billion from portfolio company LyondellBasell Industries (LYB) by selling 16.5 million shares at $68 each in a secondary offering on Tuesday.
This transaction included, Apollo has taken out approximately $6.7 billion via offerings and dividends from LyondellBasell, representing about 3.5 times the private equity firm's $2 billion initial investment.
Apollo is not done with the chemicals company. After the latest offering, the firm still holds a 9.6% stake, which at $68.58 per share, LyondellBasell's closing price Tuesday, is valued at $4.8 billion.
If analysts' expectations turn into reality, Apollo could sell its remaining shares for a lot more than the current share price.LyondellBasell, whose U.S. headquarters are in Edison, N.J., converts natural gas liquid feedstock into plastic resins and other chemicals and crude oil into fuels, such as gasoline, diesel and jet fuel. JPMorgan Securities LLC raised its price target for LyondellBasell to $76 per share from $70 in late July, citing consistently low natural gas liquid costs and a larger-than-expected cash flow from operations, which climbed to $1.26 billion vs. the firm's $700 million expectation. Others are also bullish on LyondellBasell. Jefferies raised its price target to $83 from $80, Susquehanna Bancshares, Inc. raised its price target to $86 from $74 and Deutsche Bank AG raised it to $80 from $75. JPMorgan estimates that LyondellBasell will post 2013 EBITDA of $6.25 billion on sales of $45.1 billion, up from 2012 Ebitda of $5.8 billion on sales of $45.5 billion. In 2008, Apollo wagered almost $2 billion on distressed debt of LyondellBasell's U.S. unit, Lyondell Chemical. That debt was converted in a subsequent bankruptcy reorganization into a common equity stake in the parent. Barclays was the sole underwriter for the offering. Baker Botts' Timothy Taylor, Michael Bresson and Matthew Kuryla acted as LyondellBasell's outside counsel. Akin Gump Strauss Hauer & Feld advised Apollo. Davis Polk & Wardwell acted as outside counsel to the underwriter. -- Written by Taina Rosa in New York
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