July 17 (Bloomberg) -- Basell Holdings NV, the loser in a bid to acquire Huntsman Corp. last week, agreed to buy Lyondell Chemical Co. for about $12.7 billion in cash to gain raw materials used in making plastics and synthetic fibers.

Lyondell investors will get $48 a share from Hoofddorp, Netherlands-based Basell, the companies said today in a joint statement. That's 45 percent more than Lyondell's closing price May 10, before billionaire Len Blavatnik's Access Industries Holdings LLC, Basell's parent company, disclosed an interest.

Blavatnik has been outbid for U.S. chemical makers twice in as many months. Saudi Basic Industries Corp. topped his offer for General Electric Co.'s plastics unit in May, and Apollo Management LP trumped his Huntsman deal on July 12. Lyondell, the fourth-largest U.S. chemical maker, makes propylene needed to produce polypropylene resin, Basell's biggest product.

``While the strategic rationale behind the bid is sound, Basell is paying a full price,'' said HSBC Securities analyst Hassan Ahmed, who has a ``neutral'' rating on Lyondell shares. ``It is unlikely that a bidding war for Lyondell will erupt, given that the price paid might be considered too steep.''

Shares of Houston-based Lyondell rose $6.93, or 17 percent, to $47.05 at 4:24 p.m. in New York Stock Exchange composite trading. It was the biggest gain since 1999. The shares have more than doubled in the past year.

Competing Bid?

J.P. Morgan Securities analyst Jeffrey J. Zekauskas, who rates the shares ``overweight,'' urged investors to hold their shares because he said another bid of $50 or more may emerge from an oil company or foreign energy company. Banc of America Securities analyst Kevin McCarthy, who has a ``neutral'' rating, said a competing offer is unlikely.

The cash value of the merger would be the third-largest chemical acquisition ever. Aventis SA's 1998 purchase of Hoechst AG for $21.2 billion is the largest deal, followed by Linde AG's 2006 acquisition of U.K. industrial gases maker BOC Group Plc for 8 billion pounds ($14.2 billion), according to data compiled by Bloomberg.

Ebitda Estimates

McCarthy said Access is buying Lyondell for 6.7 times his estimate of $3.06 billion in earnings before interest, taxes, depreciation and amortization, or ebitda. HSBC's Ahmed said the offer represents 9.3 times his estimated 2007 ebitda.

The agreement to buy Lyondell is valued at about $19 billion, including the assumption of about $6.5 billion in debt, Lyondell spokeswoman Susan Moore said. The company has 265 million shares outstanding, she said.

Lyondell's assets are ``a clear strategic fit'' for products produced by Basell, HSBC's Ahmed said. Lyondell has 1.8 million tons of excess propylene capacity in North America that Basell could use to fill its need for 1.2 million tons a year, Ahmed said. A merger would create the world's largest polyolefins producer, he said.

Blavatnik, a U.S. citizen who formed Access after emigrating to the U.S. from Russia, acquired Basell in 2005 to become the world's biggest maker of polypropylene, used to make plastics for car parts and fibers for carpets and clothing.

Complementary Assets

The companies have complementary polyethylene assets, McCarthy said. Basell's production of polyethylene, the world's most-used plastic, is based in Europe. Lyondell is the third- largest producer of the chemical in North America and the second-biggest for ethylene, a key raw material, he said.

The companies said they had a combined $34 billion of revenue last year. Lyondell, which makes chemicals and plastics, refines high-sulfur crude oil and produces fuels, had sales of $22.2 billion.

This year, the combined companies will have more than $41 billion in sales, McCarthy said.

``We are very pleased that Basell recognizes the value and fit of our portfolio of chemical and refining assets,'' Lyondell Chief Executive Officer Dan F. Smith said in the statement. ``The combination of our companies will enhance our opportunities.''

Access, based in New York, bought the right to acquire a stake in Lyondell on May 11 and indicated it might bid for all of the company. Lyondell's Smith said during a May 9 presentation that he might consider a buyout offer for the business.

``The timing of the deal is in part motivated by Basell's recent failed bids for both GE Plastics and Huntsman,'' HSBC's Ahmed said. ``These bids were indicative of both Basell's acquisitive intent across a broad slate of chemical products and the size of the assets for which it was willing to bid.''

Canceled Deal

Access was outbid for GE Plastics by Saudi Arabia's Sabic, the world's biggest chemical company by market value, which agreed on May 21 to pay $11.6 billion in cash.

Huntsman last week canceled an agreement to be bought by Access after accepting a $6.54 billion cash offer from Apollo's Hexion Specialty Chemicals division. Huntsman investors will get $28 a share; Access had bid $25.25. The deal with Apollo totaled $10.6 billion including debt and half of a $200 million breakup fee payable to Access.

Lyondell would pay Access $385 million to terminate the deal for a superior offer, according to the merger agreement filed with regulators.

Dow Chemical Co. and Ineos Group Holdings Plc have overlapping businesses with Lyondell, Ahmed said. Ineos is unlikely to bid because it is saddled with debt from a $9.6 billion acquisition of BP Plc's Innovene unit in 2006, and Dow has said it would only acquire commodity assets where raw materials are inexpensive, such as the Middle East, he said.

Basell has manufacturing sites in 19 countries and sells its products in more than 120 nations.

In addition to chemicals, Access owns assets in the natural resources and telecommunications and media industries, the statement said.

To contact the reporters on this story: Chris Jasper in London at cjasper@bloomberg.net; Jack Kaskey in New York at jkaskey@bloomberg.net.

Last Updated: July 17, 2007 17:57 EDT