We waited for this day for a long time – Saudi Aramco has acquired a 70% stake in SABIC for $69.1bn. The acquisition will accelerate Aramco’s ambition to increase its refining capacity from the current 4.9 million barrels per day (bpd) to 8-10 million bpd by 2030, of which 2-3 million bpd will be converted into petrochemical products. Amin Nasser, president & CEO, Saudi Aramco, commented: “This transaction is a major step in accelerating Saudi Aramco’s transformative downstream growth strategy of integrated refining and petrochemicals.”
Aramco signed a share purchase agreement to acquire the majority stake in SABIC from the Public Investment Fund (PIF) of Saudi Arabia, in a private transaction of SAR123.39 per share. According to Nasser, Aramco and SABIC together will create a stronger, more robust business to enhance competitiveness and help meet rising demand for energy and chemical products needed by their customers around the world.
The merger of the world’s largest oil company and the world’s largest petrochemical company is a game-changing decision for the downstream industry in the Middle East. As stated by Yasir Othman Al-Rumayyan, managing director, PIF, this is a win-win-win transaction and a transformational deal for three of Saudi Arabia’s most important economic entities – Aramco, SABIC and PIF.
As stated by Yousef Al-Benyan, SABIC vice chairman and CEO, SABIC will benefit from the additional scale, technology, investment potential, and growth opportunities Aramco will bring as a global leader in integrated energy and chemicals production, while remaining focused on meeting the needs of their customers and the creation of value for their shareholders.
Saudi Arabia’s economic and industrial endeavours are centred on Saudi Vision 2030, which is a masterplan to reduce the kingdom’s dependence on oil, diversify its economy, and develop public service sectors such as health, education, infrastructure, recreation and tourism. The integration of operations of Aramco and SABIC will definitely act as a catalyst for realisation of Saudi Vision 2030. As a result of this acquisition, investors around the world are keen to know the future of the much-discussed Aramco IPO.
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