Saudi Arabian petrochemicals companies Saudi Industrial Investment Group (SIIG) and the National Petrochemical Company (Petrochem) have begun talks over a potential merger, they said on Sunday.
A deal would mark further consolidation in the Saudi petrochemicals sector after oil giant Saudi Aramco bought a 70 percent stake in Saudi Basic Industries in June.
The SIIG and Petrochem boards have approved initial discussions to study the feasibility of a merger but no agreement has been reached on any final structure of a merged entity, the companies said in separate statements.
SIIG owns 50 percent of Petrochem but the two companies are similar in size, suggesting a deal would be a merger of near equals.
The two companies had combined assets of $9.5 billion as of June, Refinitiv data shows. SIIG had total assets of 19.2 billion riyals ($5.12 billion) at the end of June while Petrochem had 16.4 billion riyals in total assets.
Petrochem, whose market capitalization is $3.7 billion, has a larger market value than SIIG.
Shares of Petrochem were up 7.8 percent and SIIG was up nearly 5 percent in early trading.