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Saudi Aramco Acquires Majority Stake in SABIC

Saudi Aramco acquired a 70% stake in Saudi Basic Industries Corporation (SABIC) from the Public Investment Fund, the sovereign wealth fund of Saudi Arabia, for SAR 259.125 billion ($69.1 billion). As the acquisition was completed, the state-owned company also purchased 2.1 billion shares of SABIC’s stock.

Aramco raised $10 billion in a loan this year to help with the SABIC acquisition. It will pay for the acquisition over the next 8 years to provide a buffer against weak oil prices.

Aramco’s stake in SABIC will increase its presence in the global petrochemicals industry, which the company says is expected to record the fastest growth in oil demand in the years ahead.

The acquisition, first announced in March 2019, 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.

Together, Aramco and SABIC recorded petrochemicals production volume of nearly 90 million tonnes in 2019.

As the new majority shareholder of SABIC, Aramco can elect the majority of SABIC’s directors. Aramco said a corporate collaboration and integration committee was established to make recommendations on matters expected to create value for SABIC and for the Aramco group as a whole. This committee will be chaired by the SABIC CEO and will include two other members from SABIC and three members from Aramco.

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