Saudi Aramco Finalizes SABIC Deal

Posted on 06/17/2020


On June 17, 2020, Saudi Aramco revealed the completion of 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.

On June 16th, Saudi Aramco and PIF put in an addendum to the share purchase agreement.

The purchase price is being paid over several installments pursuant to a seller loan by PIF.

Here it goes as follows:

1. on or before August 2, 2020, an amount equal to US$ 7 billion.

2. on or before April 7, 2021, an amount equal to US$ 5 billion.

3. on or before April 7, 2022, an amount equal to US$ 8.5 billion plus a loan charge of US$ 500 million.

4. on or before April 7, 2023, an amount equal to US$ 10.5 billion plus a loan charge of US$ 500 million.

5. on or before April 7, 2024, an amount equal to US$ 10.5 billion plus a loan charge of US$ 600 million.

6. on or before April 7, 2025, an amount equal to US$ 10.5 billion plus a loan charge of US$ 800 million.

7. on or before April 7, 2026, an amount equal to US$ 17.1 billion plus a loan charge of US$ 1.5 billion.

8. on or before April 7, 2027, a loan charge of US$ 1 billion.

9. on or before April 7, 2028, a loan charge of US$ 1 billion.

Saudi Aramco also will make an advance payment of US$ 3 billion in April 2022 based on the occurrence of certain oil market conditions tied to 2021.

According to the press release, “The completion of the transaction enhances Aramco’s presence in the global petrochemicals industry, a sector expected to record the fastest growth in oil demand in the years ahead. Combined, in 2019 Aramco and SABIC recorded petrochemicals production volume of nearly 90 million tonnes, 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. It specifically enhances Aramco’s chemicals strategy by transforming Aramco into one of the major global petrochemicals players; integrating upstream production with SABIC feedstock; expanding capabilities in procurement, supply chain, manufacturing, marketing and sales; complementing geographic presence, projects and partners; and increasing the resilience of cash flow generation with synergistic opportunities. SABIC expects also to benefit from Aramco’s Downstream chemicals feedstock production, and ability to invest in and execute major growth projects at a very large scale.”