Saudi Arabia’s oil giant Aramco buys 70 pct of SABIC for $69.1 billion in mega-deal

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Saudi Aramco purchased 2.1 billion shares, or 70 percent, of Saudi Basic Industries Corp (SABIC) for 259 billion riyals ($69.1 billion) in four special transactions on Sunday.

As previously announced, the price per share was 123 riyals ($32.8).

“The deal completion is on-track with expectations to be finalized before the end of the second quarter. All necessary pre-closing regulatory clearances have been obtained. We will make a completion announcement in due course,” Saudi Aramco told Al Arabiya English in a statement.

Saudi Aramco closed 0.31 percent down on the Saudi Stock Exchange (Tadawul) at market close, while SABIC closed 0.56 percent down, following the news.

The market’s headline index, the TASI, closed 0.2 percent down.

The oil giant signed a deal last year with Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), to take the majority shareholding in the petrochemicals company.

The payment for SABIC, the world’s fourth-largest petrochemicals firm, will be funded in part by four bonds issued by Aramco to the PIF, reports indicated late last year.

Aramco indicated that 36 percent of the purchase price – which could be adjusted for certain expenses – will be paid in cash, while 64 percent will be paid in the form of a seller loan. Therefore, the proceeds to the PIF in the form of cash will amount to $500 million, and the five additional bonds will be worth $2.5 billion.

In March, Aramco received unconditional clearance from the European Commission for the acquisition, the last clearance required for the transaction.

The company reported a 25 percent fall in first-quarter net profit in May, below analyst estimates, as the coronavirus pandemic slashes global demand for petroleum products.

Net profit fell to 62.48 billion riyals ($16.64 billion), down from 83.28 billion riyals the year before.

The company said at the time that the net profit fall was a reflection of “lower crude oil prices, as well as declining refining and chemicals margins and inventory re-measurement losses.”

SABIC also warned the same month that it expected a more significant impact on its business as a result of the coronavirus pandemic in the second quarter of the year.

The company reported a net loss of 950 million riyals ($252.89 million) for the first quarter, citing lower demand for petrochemical products in the wake of the coronavirus pandemic and impairment losses as the reasons for the fall.

Read more:

Saudi Aramco receives unconditional clearance from EU on SABIC purchase

Coronavirus: SABIC expects more significant impact in second quarter earnings amid coronavirus

Saudi Aramco, PIF amend terms of payment for SABIC acquisition

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