September 21, 2020 [Reuters] – Saudi Arabian petrochemicals companies Saudi Industrial Investment Group (SIIG)Â 2250.SEÂ and the National Petrochemical Company (Petrochem)Â 2002.SEÂ 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 2222.SE bought a 70% stake in Saudi Basic Industries 2010.SE 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% 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 capitalisation is $3.7 billion, has a larger market value than SIIG.
Shares of Petrochem were up 7.8% and SIIG was up nearly 5% in early trading.
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