Reliance jumps on hopes of Lyondell bargain

By Pratish Narayanan and Narayanan Somasundaram

MUMBAI (Reuters) - Shares in Reliance Industries rose nearly 4 percent to a one-month high on a view India's biggest firm would steal a bargain with its bid for bankrupt petrochemicals firm LyondellBasell, a deal sources say may be worth $12 billion.

If the deal goes through, it would catapult Reliance, controlled by India's richest man Mukesh Ambani, into the ranks of top petrochemical makers such as Saudi Arabia's SABIC, Germany's BASF and Dow Chemical Co.

Sources have put the value of the cash offer at $10-$12 billion, making it India's second-biggest overseas purchase after Tata Steel bought Corus for $13 billion in 2007.

"In deals like Tata-Corus, the valuations were phenomenally high. But when a company is down and out, it is going to be cheap," said Rakesh Rawal, head of private wealth management at Anand Rathi Financial, who has bought the stock for his clients.

"If I am breathing my last, what bargaining will I do," he added, saying Reliance is betting on turning around a bankrupt company rather than paying a heftier price to buy a more stable firm.

The bid comes when prices of assets have fallen globally in the wake of the financial crisis. Bank of America Merrill Lynch is among the advisers for Reliance, sources told Reuters.

The deal would give Reliance, India's biggest listed firm with a market value of $75 billion, greater access to U.S. and European markets and expand its product offering, analysts said.

"Reliance has largely been a domestic story, but this deal would make it a global story," Deepak Pareek, an oil and gas analyst at Angel Broking, said.