Aramco: Acquisition of a 70 % stake in Sabic

Aramco has announced the successful 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 USD 69.1 billion on 17 June 2020.

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.

As the new majority shareholder of Sabic, Aramco has the ability to elect the majority of Sabics’s directors. The Sabic board will ensure strategic alignment, and oversee further creation of value for Sabic and all of its shareholders as it becomes an important member of the Aramco group. A Corporate Collaboration and Integration Committee has also been established to make recommendations on collaboration and integration matters. This committee will be chaired by the Sabic CEO and will include two other members from Sabic and three members from Aramco.