Aramco-SABIC deal doubles total combined value of MENA mergers, says analyst

Speaking to Al Arabiya, Senior Natural Resources Correspondent Patrick Harris stressed on the importance of the Saudi Aramco and SABIC deal as it doubles the total combined worth of last year's merger deals in the MENA region.

According to Harris, the value of mergers last year amounted to $55 billion, mostly in the energy sector.

“Most of that last year was also in the energy sector and this deal is adjacent in chemicals so also skew the shift in terms of sector breakdown of deals. Even without the SABIC deal, we are already over $20 billion worth of deals this year and it is not even March yet. So as you can imagine, $90 billion is already double what it was last year,” Harris said.

Saudi Aramco, the world’s top oil producer, is buying a 70 percent stake in Saudi Basic Industries Corp (SABIC) from the Kingdom’s sovereign wealth fund for $69.1 billion.

The deal comes after months of negotiations between Aramco and Saudi Arabia’s Public Investment Fund (PIF).

SABIC, headquartered in Riyadh, operates businesses in more than 50 countries and employs 33,000 people. In 2018, the company’s total production in its various business units reached 75 million metric tons, with a net income of $5.7 billion, annual sales of $45 billion, and total assets of $85 billion.

As for other deals across the sectors, Harris described the recent Uber-Careem deal as interesting as it is indicative of foreign investor confidence in the region.

“The interesting thing is having someone invest into the region and that is inductive of wider inbound investment into the Middle East whether it is technology or consumer or in chemicals or in power utilities,” Harris said.

Uber announced plans last week to acquire Dubai-based rival Careem for $3.1 billion, buying dominance in a competitive region ahead of a hotly anticipated initial public offering.