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Saudi Arabian petrochemical companies SIIG and Petrochem unveil plan for merger

September 29/2021

MOSCOW (MRC) - Saudi Arabian petrochemicals companies Saudi Industrial Investment Group (SIIG) and the National Petrochemical Company (Petrochem) said on Tuesday they had signed a non-binding agreement on a proposed merger, reported Reuters.

The deal would consist of a share exchange offer made by SIIG to acquire the remaining 50% of Petrochem that SIIG did not already own, the companies said in separate bourse statements.

SIIG would pay Petrochem's shareholders by issuing new shares in SIIG, which would result in a delisting of Petrochem's shares. Petrochem's shareholders would receive 1.27 shares in SIIG in exchange for each share they owned in Petrochem.

SIIG has appointed HSBC Saudi Arabia as its financial advisor while Petrochem is working with GIB Capital.

The non-binding memorandum of understanding was subject to the companies reaching a final agreement on the terms of the deal, SIIG said.

As MRC informed before, in September, 2020, the two companies began talks over the merger, which would mark further consolidation in the Saudi petrochemicals sector, after oil giant Saudi Aramco bought a 70% stake in Saudi Basic Industries last year.

Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,396,960 tonnes in January-July 2021, up by 7% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 841,990 tonnes in the first seven months of 2021, up by 29% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of statistical copolymers of propylene (PP random copolymers) subsided.

Petrochem has a market capitalisation of about USD6.3 billion and SIIG of about USD4.8 billion. The Saudi government has a 13.1% stake in SIIG and a 25% stake in Petrochem, according to Refinitiv data.


mrcplast.com
Author:Margaret Volkova
Tags:PP, PE, propylene, ethylene, petrochemistry, Sabic, Saudi Aramco, Saudi Arabia.
Category:General News
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