Saudi Basic Industries Corp. (SABIC), Riyadh, announced the completion on June 16 of Saudi Aramco’s acquisition of the Public Investment Fund of Saudi Arabia’s (PIF) stake in SABIC, according to a company statement on the Saudi stock exchange, Tadawul. Saudi Aramco, the world’s largest oil company, now owns a 70 percent stake in the Saudi petrochemicals company.
Saudi Aramco signed a share purchase agreement with PIF in March last year to acquire its 70 percent majority stake in SABIC (GM March 29, 2019). The proposed deal was seen as the Middle East’s largest-ever.
SABIC said in this week’s statement the transaction will be “a key pillar for SABIC to continue as the leader of the petrochemicals industry in Saudi Arabia, and reinforce its strategy to become a world leader in chemicals.”
It said it will continue to be a listed company on the Saudi Stock Exchange and highlighted that the remaining 30 percent of its publicly traded shares are not part of the transaction with Saudi Aramco.
In a separate stock exchange statement, Saudi Aramco said the acquisition of the SABIC stake is consistent with Saudi Aramco’s long-term downstream strategy to grow its integrated refining and petrochemicals capacity and create value from integration across the hydrocarbon chain. It said it expects SABIC to benefit from the integration with Saudi Aramco’s Upstream and Downstream refining and chemicals businesses and the ability to invest in and execute major growth projects.
In the fertilizer sector, SABIC owns a 30 percent share in Ma’aden Phosphate Co. (MPC), and a 15 percent interest in Ma’aden Wa’ad Al-Shamal Phosphate Co. (MWSPC). It also owns a 50.1 percent stake in Saudi Arabian Fertilizer Co. Ltd. (SAFCO), Riyadh. SAFCO earlier this year acquired from SABIC its 100 percent-owned subsidiary SABIC Agri-Nutrients Investment Co. Ltd. (SANIC) (GM April 10, p. 31).
SANIC owns SABIC’s 50 percent stakes in National Chemical Fertilizer Co. (Ibn Al-Baytar) and in Al-Jubail Fertilizer Co. (Al Bayroni), and its 33.33 percent holding in Bahrain-based nitrogen fertilizer producer Gulf Petrochemicals Industries Co. (GPIC).
Saudi Aramco confirmed the transaction price for the SABIC stake was SAR259.125 billion ($69.1 billion), equating to SAR123.39 per share, which is in line with the price tag agreed in the original share purchase agreement with PIF.
The state oil behemoth in its statement this week said it and PIF on June 16 entered into an addendum to their March 27, 2019, share purchase agreement. Under the addendum, the purchase price will be paid for in several installments, pursuant to a seller loan provided by PIF. The loan payments, which are represented by promissory notes issued to PIF at transaction closing, are payable between Aug. 2, 2020 (on which the first payment will be made) and April 7, 2028 (the date of the last payment).
Saudi Aramco last month was reported to be looking to restructure the SABIC deal, and was said to be in early talks about further staggering payments for the acquisition, as its finances come under pressure from the collapse in oil prices (GM May 15, p. 34). The state oil company was also reported to be considering whether it was possible to reduce the agreed upon $69.1 billion price tag on the transaction.
“Global economic institutions considered the completion of the deal at this time as a determination of Saudi Arabia to implement its economic program with wisdom and competence, despite any difficulties or challenges left by the negative economic implications,” Saudi Press Agency reported on June 16, citing an Al-Riyadh newspaper editorial.