Saudi Aramco announced the signing of a share purchase agreement on Wednesday to acquire a 70 percent majority stake in Saudi Basic Industries Corporation (SABIC) from the Public Investment Fund of Saudi Arabia for SAR 259.125 billion (or SAR 123.39 per share), which is equivalent to $69.1 billion.
According to the state-run energy giant's statement, currently Saudi Aramco and SABIC have petrochemicals production capacity of 17 and 62 million tons per year, respectively. Saudi Aramco said the acquisition is in line with its long-term strategy to drive growth through an enhanced downstream portfolio by increasing global 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.
"The remaining 30 percent of 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 press release added.
Amin Nasser, president and CEO of Saudi Aramco, said the transaction is a major step in accelerating the company's downstream growth strategy of integrating refining and petrochemicals.
Abdulaziz Al-Judaimi, senior vice president of Downstream business unit at Saudi Aramco, added that the company's downstream strategy is focused on meeting global customer needs by securing outlets for its crude oil through the expansion of its 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," he said.
In 2018, Riyadh-based SABIC's consolidated production volume across its various business units was 75 million metric tons, and the company recorded a net income of $5.7 billion, annual sales of $45 billion, and total assets of $85 billion.
By Hale Turkes