Pursuant to the terms of the MoU, Sahara and Sipchem have reached a preliminary, non-binding agreement on valuation, subject to completion of confirmatory due diligence, finalisation of a binding implementation agreement, including agreement on certain commercial issues.
Under the terms of the MoU and in order to implement the proposed transaction, Sipchem, following the execution of the binding implementation agreement, will make an offer to all Sahara shareholders to acquire all their shares in Sahara. Sipchem will issue, and each Sahara shareholder will receive, 0.8356 new Sipchem shares for each Sahara share held by them.
The proposed transaction will result in Sipchem having an increased share capital of 733,333,332 shares, of which 366,666,666 shares, representing 50% of the increased share capital, will be held by Sahara shareholders and 366,666,666 shares, representing 50% of the increased share capital, will be held by Sipchem shareholders. The exchange ratio and the resulting ownership split has been agreed as a result of an extensive mutual due diligence and valuation exercise.
Aligned with the goals of Saudi Vision 2030, which aims to create a thriving private sector in the kingdom, the proposed transaction is expected to deliver multiple strategic benefits to the combined business, including: strengthening the product portfolio, diversifying feedstock supply and building out presence along the value chain; increasing scale and resilience in the evolving petrochemicals sector, both in the kingdom and internationally; building on the competitive advantages and complimentary capabilities of Sahara and Sipchem to provide benefits commercially, operationally and functionally; driving efficiency and productivity of the closely situated industrial asset portfolios of each of Sahara and Sipchem in Jubail; and creating a platform with improved financial resources, capital market access, and product and technological expertise to take advantage of local and international growth opportunities, both organic and inorganic.
Pursuant to the MoU, Sahara and Sipchem will continue to advance discussions in relation to the proposed transaction and work towards entering into a binding implementation agreement no later than 28 February 2019, unless the parties agree to extend such period. Shareholders in each company were advised that there can be no assurance that at this stage these discussions will result in an agreement being reached, or that if reached, the proposed transaction will be consummated.
The entry into the MoU does not mean that the two companies have reached a final agreement in relation to the proposed transaction. The MoU does not constitute an offer by Sipchem to Sahara’s shareholders, or its board of directors, nor does it constitute an announcement of a firm intention to make an offer. The MoU is a non-binding agreement for the purpose of cooperation between Sipchem and Sahara to complete confirmatory due diligence, finalise the implementation agreement and other commercial issues in relation to the proposed transaction.
The proposed transaction is subject to several approvals, including but not limited to, the Capital Market Authority, the Extraordinary General Assemblies of Sahara and Sipchem, other applicable authorities and other consents.
For the purpose of the proposed transaction, Sahara has appointed Morgan Stanley Saudi Arabia as its financial advisor and Abuhimed Alsheikh Alhagbani Law Firm (AS&H) in cooperation with Clifford Chance LLP as its legal advisor. Sipchem has appointed HSBC Saudi Arabia as its financial advisor and Khoshaim & Associates (K&A) and Allen & Overy LLP as its legal advisors.
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