Dow Chemical signed an agreement to raise its stake in petrochemical firm Sadara, acquiring an additional 15 per cent from joint-venture partner Saudi Aramco.
The current equity ownership split is 65 percent Saudi Aramco and 35 percent Dow. If the potential transaction is concluded as presently proposed, Dow and Saudi Aramco would each hold a 50 percent equity stake in Sadara,” Saudi Aramco said in a statement.
The companies did not disclose the financial impact of the deal but said the financial structure and governance of Sadara will remain unchanged.
“Increasing our equity stake in this iconic joint venture is a powerful example of our strategic partnership with Saudi Aramco and is yet another accelerator in Dow’s long-term growth strategy designed to capture growing consumer-led demand in our key end-markets of transportation, infrastructure, packaging, and consumer products in developing regions,” said Andrew Liveris, Dow’s chairman and CEO.
The Sadara chemical complex, which the company says is the largest of its kind ever built in a single phase, is currently operating all of its 26 units that manufacture a portfolio of valued-added performance plastics and specialty chemicals.
More than three million metric tons of performance-focused products serving the Packaging, Transportation, Infrastructure and Consumer markets will add new value chains to Saudi Arabia’s vast hydrocarbon reserves, resulting in the diversification of the economy and region.
Saudi Aramco president and CEO Amin H. Nasser said, “Dow’s larger stake in Sadara is an endorsement of the Kingdom’s vibrant ecosystem, and signals Dow’s confidence in our partnership as a model of mutually beneficial foreign direct investment. The time is right to fully leverage Dow’s global leadership to further contribute to the Kingdom’s economic transformation in line with Vision 2030.”
Aramco said the potential equity equalisation would occur following the later of two events - the intended separation of the Materials Science Company, within 18 months after the close of the merger of equals between Dow and DuPont on August 31 and Sadara’s completion of the creditors’ reliability test, which is part of the limited-recourse financing used to fund the Sadara project development.