Saudi Basic Industries Corp (SABIC), one of the world’s largest petrochemical producers, said on Tuesday that it has successfully merged two of its wholly owned affiliates, Saudi Petrochemical Company (Sadaf) and Arabian Petrochemical Company (Petrokemya).
“The merger is driven by SABIC’s strategy to increase efficiency and competitiveness of its operations,” the company said in a statement to the Saudi Stock Exchange.
The petrochemical giant added that the latest transaction will not have immediate impact on its financial status, but is expected to improve overall cost competiveness in the long-term.
SABIC had announced its plans to merge Sadaf and Petrokemya in March to create a more efficient entity. The company said at the time that Sadaf’s assets, rights, liabilities, and obligations will transfer to Petrokemya.
As of the merger, Sadaf no longer exists as an independent entity.
Petrokemya, based in Jubail in eastern Saudi Arabia, produces feedstock chemicals including ethylene, propylene, butene, benzene and butadiene.
Sadaf was also located in Jubail, and included six petrochemical plants with a total production capacity of more than 4 million tons per year. SABIC acquired Sadaf from Shell for $820 million in August, 2017.
Saudi Arabia’s sovereign wealth fund currently owns a 70 percent stake in SABIC. In March, Saudi Aramco announced it is buying this stake for $69.1 billion.
The move is set to create a “stronger platform to enhance competiveness and meet the growing demand for energy and chemical products,” Saudi Aramco CEO Amin Nasser said at the time.