Saudi Aramco recently announced it has acquired a 70 per cent stake in Saudi Basic Industries Corporation (SABIC) from the Public Investment Fund (PIF), the sovereign wealth fund of Saudi Arabia, for a total purchase price of SAR 259.125 billion ($ 69.1 billion), equating to SAR 123.39 price per share. The completion of the transaction enhances Aramco’s presence in the global petrochemicals industry.
Combined, in 2019 Aramco and SABIC recorded petrochemicals production volume of nearly 90 million tonnes, including agri-nutrient and specialty products.
The acquisition of the SABIC stake is consistent with Aramco’s long-term downstream strategy to grow its integrated refining and petrochemicals capacity and create value from integration across the hydrocarbon chain, said an Aramco press release.
It specifically enhances Aramco’s chemicals strategy by transforming Aramco into one of the major global petrochemicals players; integrating upstream production with SABIC feedstock; expanding capabilities in procurement, supply chain, manufacturing, marketing and sales; complementing geographic presence, projects and partners; and increasing the resilience of cash flow generation with synergistic opportunities.
SABIC also expects to benefit from Aramco’s downstream chemicals feedstock production, and ability to invest in and execute major growth projects at a very large scale.
As the new majority shareholder of SABIC, Aramco has the ability to elect the majority of SABIC’s directors. The SABIC board will ensure strategic alignment, and oversee further creation of value for SABIC and all of its shareholders as SABIC becomes an important member of the Aramco group.
A Corporate Collaboration and Integration Committee has also been established to make recommendations on collaboration and integration matters expected to create value for SABIC in particular and for the Aramco group as a whole. This committee will be chaired by the SABIC chief executive officer and will include two other members from SABIC and three members from Aramco.