Brazilian petrochemical giant Braskem SA yesterday agreed to acquire its rival Quattor Petroquimica SA (Quattor) in a move to further expand and consolidate the nation's petrochemical industry to take on global competitors.

The deal brings an end to the speculations going on for several months, by creating the world's eighth-largest petrochemicals company with combined revenue of over $17 billion. The new entity would produce 100 per cent of Brazil's polyethylene, polypropylene and PVC used for anything from kitchen containers, dyes and detergents to synthetics and car parts.

Under the terms of the deal, Unipar, the Quattor holding company, has agreed to sell its 60-per cent stake in Quattor for approximately $478 million. Petrobras is the other shareholder with 40 per cent.

Braskem's chief executive officer Bernardo Gradin told investors in Sao Paulo: ''Our strategy is to become one of the five biggest global petrochemical makers.'' ''The future is soon,'' he added.

It is believed that the Brazilian petro-giant is also eying US assets.

Sao Paulo-based Braskem is Latin America's leading thermoplastic resin producer with a focus on polyethylene, polypropylene and PVC. The company operates 18 industrial units spread over the states of Bahia, Alagoas, Rio Grande do Sul and Sao Paulo, employing around 6,700 people. Its products are exported to around 60 countries and the company's 2008 revenue was around $13 billion.

Braskem is controlled by closely held industrial conglomerate Odebrecht with majority voting rights, while the other shareholder is the state-owned energy major Petrobras.

Under the terms of the agreement, a new holding company BRK Investimentos Petroquímicos SA (BRK) will be created which will hold 100 per cent of Braskem common stock that is currently held by Odebrecht and Petrobras. Both Odebrecht and Petrobras agreed to inject Brazilian reais (R$) 2.5 billion (approx. $1.37 billion), R$1 billion (approx. $550 million) billion respectively to fund the acquisition of new common and preferred stocks in Braskem.

Further to the capital injections, Odebrecht will hold 53.79 per cent stake in Braskem while Petrobras will have 46.21 per cent.

It is planned to increase the capital of Braskem between R$4.5 and R$5 billion by issuing 80 per cent common stock and 20 per cent preferred stock. BRK will subscribe up to R$3.5 billion of the new issue at R$14.40 per share.

The capital increase is intended to strengthen the company's capital structure by reducing its debt burden and keeping financial flexibility for its growth plans.

Rio de Janeiro-based Quattor is a major petrochemical company in Brazil which has 11 production units in four sites located in the states of Rio de Janeiro, Sao Paulo and Bahia. The company employs around 1700 people and reported revenue of $4.9 billion in 2008.

Baskem's total production capacity of chemical and petrochemical products is around 11 million tonnes, while Quattor's is around 4.6 million tonnes.