MOSCOW (MRC) -- State-owned Saudi Aramco bought 2.1 billion shares of Saudi Basic Industries (SABIC) on the stock market on Sunday as it completed its deal agreed last year to buy 70% of the petrochemical giant, reported Reuters with reference to sources and market data.
Four transactions were executed on the Saudi exchange, known as Tadawul, involving SABIC shares worth 259,125 billion riyals ($69.1) billion, Tadawal data showed, without naming the buyer.
Four sources confirmed the transactions were part of the Aramco acquisition agreed in 2019 and which will be one of the biggest in the global chemical industry once completed.
The shares are being sold by the Saudi sovereign fund, the Public Investment Fund (PIF), giving it more cash to invest in the government programme to diversify the economy away from oil.
Sources told Reuters in May that Aramco had been looking to restructure the deal after SABIC’s market value fell more than 40% due to an oil price slump. Sunday’s transactions suggested the deal price had not changed but it was unclear whether the structure for making payments to PIF had been revised.
Sunday’s share trades involved cross transactions, also known as special deals on Tadawul, which are executed at an agreed price between a buyer and seller, without those involved.
“The deal completion is on-track with expectations to be finalised before the end of the second quarter,” Aramco told Reuters in a statement when asked about the transactions. “We will make a completion announcement in due course.”
Aramco has been boosting investments in refining and other downstream industries.
Three of Sunday’s deals were completed at 123.40 riyals per share and the fourth at 123.20 riyals, prices that were similar to last year’s agreed price of 123.39 riyals per share.
SABIC shares ended at 88.50 riyals on Sunday.
Aramco raised USD10 billion in a loan this year to help with the SABIC acquisition, sources previously said.
As MRC wrote before, SABIC has recently announced its financial results for the first quarter, reporting a net loss of 950 million Saudi riyals (USD250 million).
We remind that Sinopec SABIC Tianjin Petrochemical Co. (SSTPC), a 50-50 joint venture of Sinopec and Sabic, shut its naphtha cracker in Tianjin on 1 May 2020 for routine maintenance work. The cracker is expected to remain off-line until early July 2020. The naphtha cracker is designed to produce 1 million tons/year of ethylene, which supplies several local buyers in the Tianjin area. Besides, the company is also planning to expand its cracker capacity to 1.3 million tons/year in 2021.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market totalled 347,440 tonnes in January-April 2020 (calculated by the formula production minus export plus import). Supply exclusively of PP random copolymer increased.
Saudi Basic Industries Corporation (Sabic) ranks among the world"s top petrochemical companies. The company is among the world"s market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.
Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco"s value has been estimated at up to USD10 trillion in the Financial Times, making it the world"s most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.
MRC