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SIIG and National Petrochemical in talks over potential merger deal

SIIG and National Petrochemical in talks over potential merger deal
SIIG and National Petrochemical in talks over potential merger deal

The SIIG (Saudi Industrial Investment Group) and National Petrochemical Co (Petrochem) in Saudi Arabia are reportedly in talks over a potential merger. This merger plan, which was formed 9 years back, is expected to create a new entity with SR35.6 billion in assets. Any agreed deal would later be subjected to the approval of regulators and shareholders of both the companies.

On 17th September 2020, the board of directors of Petrochem approved the company to initiate talks with SIIG and evaluate the economic feasibility. The two companies have currently reached the early stage of discussion. The main goal of SIIG is to invest in industries, particularly in petrochemicals. The company is presently holding a stake of 50% in Petrochem, which is controlling 65% of Gulf Polymers Distribution Company and Saudi Polymers Company.

Saudi Polymers has the capacity to offer more than 1.7 million tons of polymers per year at the Jubail Industrial City. These polymers are then marketed by Gulf Polymers.

As per the reported statement made by Petrochem, no deals between the company and SIIG have reached the final structure. Additionally, the company cannot guarantee whether the deal will take place despite entering the early stage of discussion to examine the financial viability.

The net income posted by SIIG for a full-year 2019 is SR606.3 million ($162 million). On the other hand, Petrochem recorded a net income of SR674.5 million. After the announcement of the recently renewed merger talks between SIIG and Petrochem, the share of Petrochem has recently been closed at 6.8% higher, while SIIG shares have been surged by 5.48%.

The announcement for the potential merger deal happened in line with the acquisition of a majority stake by Saudi Aramco in SABIC as well as the buyout of Sahara Petrochemical Co. by Saudi International Petrochemical Co.

Source credit:

https://www.icis.com/explore/resources/news/2020/09/21/10554729/saudi-industrial-investment-group-petrochem-start-merger-talks