Saudi Aramco to acquire 70 percent majority stake in SABIC

Saudi Aramco, Riyadh, Saudi Arabia, has announced that it has signed a share purchase agreement to acquire a 70 percent stake in Saudi Basic Industries Corp. (SABIC) from the Public Investment Fund (PIF) of Saudi Arabia. The private transaction is valued at SAR 259.125 billion (or SAR 123.39 per share), which is equivalent to $69.1 billion. The remaining 30 percent of publicly traded shares in SABIC are not part of the transaction, and Saudi Aramco says it has no plans to acquire these remaining shares. The transaction is subject to certain closing conditions, including regulatory approvals. 

Headquartered in Riyadh, SABIC has global operations in more than 50 countries with 34,000 employees. In 2018, SABIC’s consolidated production volume across its various business units was 75 million metric tons. The company recorded net income of $5.7 billion, annual sales of $45 billion and total assets of $85 billion.

H.E. Yasir Othman Al-Rumayyan, managing director, PIF of Saudi Arabia, says, “This is a win-win-win transaction and a transformational deal for three of Saudi Arabia’s most important economic entities. It will unlock significant capital for PIF’s continued long-term investment strategy, underpinning sectoral and revenue diversification for Saudi Arabia. Furthermore, it will introduce a strategic owner that can add considerable value to SABIC and all its shareholders while capitalizing on SABIC’s strong capabilities to unlock the opportunities for growth that Saudi Aramco, a key player in energy markets around the world, can offer.”

Amin Nasser, president and CEO of Saudi Aramco, adds, “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.”

“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," Abdulaziz Al-Judaimi, senior vice president of downstream, Saudi Aramco, says. "We are pursuing partnerships and acquisitions where we create long-term value and developing groundbreaking 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.”

Saudi Aramco says the acquisition is in line with its long-term strategy to drive growth through an enhanced downstream portfolio by increasing global participated refining capacity from 4.9 million to 8 million to 10 million barrels per day by 2030, of which 2 million to 3 million barrels per day will be converted into petrochemical products. This downstream portfolio will consume significant quantities of Arabian crude oil, the company says.

SABIC has announced its intention to work in cooperation with customers Unilever, Vinventions and Walki Group to introduce International Sustainability & Carbon Certification- (ISCC-) certified circular polymers in 2019, during what it calls “a market foundation stage” for the recycled-content polymers.

SABIC says its certified circular polymers will be produced in the Netherlands from plastic scrap feedstock developed by United Kingdom-based Plastic Energy Ltd. The firm says the recycled-content polymers will “offer a drop-in alternative for customers looking at meeting the needs of various challenging applications.”

SABIC signed a memorandum of understanding (MoU) with Plastic Energy Ltd., a chemical plastics recycling company, in late 2018. Under the MoU, Plastic Energy will supply TACOIL, a patented feedstock produced by that company to support SABIC’s petrochemical operations in Europe. The companies intend to build a commercial plant in the Netherlands to refine and upgrade TACOIL, which will be produced from the recycling of low-quality, mixed plastic scrap otherwise destined for incineration or landfill.

The plant, which SABIC says is expected to enter commercial production in 2021, helps that company achieve its commitment to establishing a circular economy and its sustainability goals.