Aramco Acquires 70% Stake In SABIC

June 19, 2020
Aramco completes its acquisition of a 70% stake in SABIC from the Public Investment Fund.

Aramco completes its share acquisition of a 70% 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 (US$ 69.1 billion), equating to SAR 123.39 price per share. Combined, in 2019 Aramco and SABIC reportedly recorded petrochemicals production volume of nearly 90 million tons, 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, according to the company. It reportedly integrates upstream production with SABIC feedstock; expanding Aramco’s capabilities in procurement, supply chain, manufacturing, marketing and sales; complementing geographic presence, projects and partners; and increasing the resilience of cash flow generation. SABIC reportedly 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.

“This is a significant milestone for three of Saudi Arabia’s most important entities. It provides capital for PIF’s long-term investment strategy as it drives the economic transformation and growth of  Saudi Arabia, further benefitting the people of our country; it supports  Aramco’s continued growth in downstream and enhances its international footprint; and, it provides SABIC a new strategic energy industry focused shareholder with the ability to support growth projects,” says H.E. Yasir Othman Al-Rumayyan, Governor, PIF.

As the new majority shareholder of SABIC, Aramco can elect the majority of SABIC’s directors. A corporate collaboration and integration committee has also been established to make recommendations on collaboration and integration matters reportedly expected to create value for SABIC in particular and for the Aramco group as a whole. This committee will be chaired by the SABIC CEO and will include two other members from SABIC and three members from Aramco.

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