Saudi Arabia’s oil giant Aramco buys 70 pct of SABIC for $69.1 billion in mega-deal

Matthew Amlôt, Al Arabiya English

Saudi Aramco purchased 2.1 billion shares, or 70 percent, of Saudi Basic Industries Corp (SABIC) for 259 billion riyals ($69.1 billion) in four special transactions on Sunday.

As previously announced, the price per share was 123 riyals ($32.8).

“The deal completion is on-track with expectations to be finalized before the end of the second quarter. All necessary pre-closing regulatory clearances have been obtained. We will make a completion announcement in due course,” Saudi Aramco told Al Arabiya English in a statement.

Saudi Aramco closed 0.31 percent down on the Saudi Stock Exchange (Tadawul) at market close, while SABIC closed 0.56 percent down, following the news.

The market’s headline index, the TASI, closed 0.2 percent down.

The oil giant signed a deal last year with Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF).

The payment for SABIC, the world’s fourth-largest petrochemicals firm, will be funded in part by four bonds issued by Aramco to the PIF.

Aramco indicated that 36 percent of the purchase price – which could be adjusted for certain expenses – will be paid in cash, while 64 percent will be paid in the form of a seller loan. Therefore, the proceeds to the PIF in the form of cash will amount to $500 million, and the five additional bonds will be worth $2.5 billion.

Net profit fell to 62.48 billion riyals ($16.64 billion), down from 83.28 billion riyals the year before.

The company said at the time that the net profit fall was a reflection of “lower crude oil prices, as well as declining refining and chemicals margins and inventory re-measurement losses.”

The company reported a net loss of 950 million riyals ($252.89 million) for the first quarter, citing lower demand for petrochemical products in the wake of the coronavirus pandemic and impairment losses as the reasons for the fall.