April 1, 2019 [Saudi Gazette] – Saudi Aramco said on Wednesday it is buying a 70 percent stake in petrochemicals giant Saudi Basic Industries Corporation (SABIC), in a deal worth SR259.12 billion. “Saudi Aramco today announced the signing of a share purchase agreement to acquire a 70 percent majority stake in SABIC from the Public Investment Fund (PIF) of Saudi Arabia, in a private transaction for SR259.125 billion ($69.1 billion) or SR123.39 per share,” Saudi Aramco said in a statement, carried by the Saudi Press Agency.
The remaining 30 percent publicly traded shares in SABIC are not part of the transaction, and Saudi Aramco has no plans to acquire these remaining shares. The transaction is subject to certain closing conditions, including regulatory approvals, the statement pointed out.
Headquartered in Riyadh, SABIC has global operations in over 50 countries with 34,000 employees. In 2018, SABIC’s consolidated production volume across its various business units was 75 million metric tons, and recorded net income of $5.7 billion, annual sales of $45 billion, and total assets of $85 billion.
Yasir Othman Al-Rumayyan, managing director of PIF, said: “This is a win-win-win transaction and a transformational deal for three of Saudi Arabia’s most important economic entities. It will unlock significant capital for PIF’s continued long-term investment strategy, underpinning sectoral and revenue diversification for Saudi Arabia. Furthermore, it will introduce a strategic owner that can add considerable value to SABIC and all its shareholders, while capitalizing on SABIC’s strong capabilities to unlock the opportunities for growth that Saudi Aramco, a key player in energy markets around the world, can offer.”
Amin Nasser, president and CEO, Saudi Aramco, said: “This transaction is a major step in accelerating Saudi Aramco’s transformative downstream growth strategy of integrated refining and petrochemicals. SABIC is a world-class company with an outstanding workforce and chemicals capabilities. As part of the Saudi Aramco family of companies, together we will create a stronger, more robust business to enhance competitiveness and help meet rising demand for energy and chemicals products needed by our customers around the world.”
Abdulaziz Al-Judaimi, senior vice president of downstream, Saudi Aramco, said: “Saudi Aramco’s downstream strategy is focused on meeting global customer needs by securing outlets for our crude oil through the expansion and growth of our refining system and deepening its integration with petrochemicals production. We are pursuing partnerships and acquisitions where we create long-term value, and developing groundbreaking crude-oil-to-chemicals technologies. SABIC is a good strategic fit and a solid platform to support our continued investment for future growth in petrochemicals — the fastest growing sector of oil demand.”
The acquisition is in line with Saudi Aramco’s long-term strategy to drive growth through an enhanced downstream portfolio by increasing global participated refining capacity from 4.9 million to 8-10 million barrels per day by 2030, of which 2-3 million barrels per day will be converted into petrochemical products. This downstream portfolio will consume significant quantities of Arabian crude oil, an Aramco statement added.
Saudi Aramco is a leading global integrated energy and chemicals company. PIF seeks to become one of the largest and most impactful sovereign wealth funds in the world, enabling the creation of new sectors and opportunities that will shape the future global economy, while driving the economic transformation of Saudi Arabia. To achieve this, the Fund is building a world-class, diversified portfolio through investments in attractive, long-term opportunities across sectors and asset classes at both the domestic and international level. Working alongside global strategic partners and renowned investment managers, PIF acts as the Kingdom’s main investment arm to deliver a strategy focused on achieving attractive financial returns and long-term value for the Kingdom, in line with Vision 2030.
The Public Investment Fund Program (2018-2020), part of the Kingdom’s Vision 2030 Vision Realization Programs, acts as a roadmap to strengthen PIF’s position as the engine behind economic diversification in the Kingdom and role in transforming Saudi Arabia into a global investment powerhouse. The program will see the Fund’s Assets Under Management increase to over $400 billion by 2020.