Saudi Aramco signed of a share purchase agreement to acquire a 70 per cent stake in Saudi Basic Industries Corporation (SABIC) for 259.1 billion riyals or US$$69.1 billion in a private transaction from the Public Investment Fund of Saudi Arabia.
Aramco paid 123.39 riyals per share. The stock closed on Wednesday at 124.20 riyals per share. The remaining 30 per cent publicly traded shares in SABIC are not part of the transaction, and Saudi Aramco has no plans to acquire these remaining shares, Aramco said in a statement.
“This is a win-win-win transaction and a transformational deal for three of Saudi Arabia’s most important economic entities,” said Yasir Othman Al-Rumayyan, managing director, Public Investment Fund of Saudi Arabia. “It will unlock significant capital for PIF’s continued long-term investment strategy, underpinning sectoral and revenue diversification for Saudi Arabia.”
The transaction, which is subject to certain closing conditions, including regulatory approvals, will introduce a strategic owner that can add considerable value to SABIC and all its shareholders, Al-Rumayyan added.
Headquartered in Riyadh, Saudi Arabia, SABIC has global operations in over 50 countries with 34,000 employees. In 2018, SABIC’s consolidated production volume across its various business units was 75 million metric tons, and recorded net income of $5.7 billion, annual sales of USD $45 billion, and total assets of $85 billion.
Amin Nasser, president and CEO, Saudi Aramco said: “This transaction is a major step in accelerating Saudi Aramco’s transformative downstream growth strategy of integrated refining and petrochemicals. SABIC is a world-class company with an outstanding workforce and chemicals capabilities. As part of the Saudi Aramco family of companies, together we will create a stronger, more robust business to enhance competitiveness and help meet rising demand for energy and chemicals products needed by our customers around the world.”
Yousef Al-Benyan, SABIC vice chairman and CEO, said: “I believe the potential rewards of this deal are clear and support our vision to be the preferred world leader in chemicals. SABIC will benefit from the additional scale, technology, investment potential, and growth opportunities Saudi Aramco will bring as a global leader in integrated energy and chemicals production, while remaining focused on meeting the needs of our customers and the creation of value for all our shareholders.”
Abdulaziz Al-Judaimi, senior vice president of Downstream, Saudi Aramco said: “Saudi Aramco’s downstream strategy is focused on meeting global customer needs by securing outlets for our crude oil through the expansion and growth of our refining system and deepening its integration with petrochemicals production. We are pursuing partnerships and acquisitions where we create long-term value, and developing ground-breaking crude-oil-to-chemicals technologies. SABIC is a good strategic fit and a solid platform to support our continued investment for future growth in petrochemicals – the fastest growing sector of oil demand.”
The acquisition is in line with Saudi Aramco’s long-term strategy to drive growth through an enhanced Downstream portfolio by increasing global participated refining capacity from 4.9 million to 8-10 million barrels per day by 2030, of which 2-3 million barrels per day will be converted into petrochemical products. This Downstream portfolio will consume significant quantities of Arabian crude oil.