Saudi Basic Industries Corp (SABIC) said on Thursday it has agreed to sell its agri-nutrients abusiness to Saudi Arabia Fertilizers Co (SAFCO), in which it owns a 43 percent stake.
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SAFCO will finance the acquisition by issuing 59.4 million shares, valued at 10 riyals each, to SABIC, raising the fertilizer group’s overall share capital by 14.25 percent to 4.76 billion riyals ($1.27 bln).
Read more: SABIC to sell agri-nutrients business to SAFCO in $1.2 billion deal
“The deal is a clear strategic attempt to create a national champion and a global leader in agrinutrients,” SABIC Chief Executive Yousef al-Benyan told reporters in a virtual press conference.
SABIC had been seeking to consolidate its various holdings in companies specializing in agri-nutrient, or fertilizer, production, and signed a preliminary deal with SAFCO to divest the resulting combined business in November 2018.
After the acquisition the business will take the name SABIC Agri-nutrient Investments.
The deal would allow SABIC to focus on its expansion in petrochemical products, and SAFCO to become more specialized in fertilizers and phosphate.
SABIC, the world’s fourth-largest chemicals company, which is 70 percent owned by oil giant Saudi Aramco, is looking to divest businesses seen as non-core.
“The new company will become the investment arm for SABIC onagribusiness and will create more synergies on assets,” Benyan said.