Khaberni - The Saudi Basic Industries Corporation (SABIC) said today, Thursday, that it has agreed to sell 100% of its shares in SABIC Europe and its entire stake in the thermoplastic engineering sector operations in the Americas and Europe in a deal totaling $950 million, as part of a business restructuring amid a slowdown in the sector.
The company's stock ended the day up 0.5% to 50.90 riyals ($13.57) after falling during the session to its lowest level in about 17 years.
According to a statement released by the company today, SABIC agreed to sell SABIC Europe's operations, which include sites in the UK and Germany, to Equita Asset Management for $500 million.
SABIC Saudi Arabia added in the disclosure that it will also sell SABIC International Holdings and SABIC Holdings in the United States to Mutares SE & Co. KGaA and its partners, which are based in Munich, in a deal worth $450 million. The companies manage operations in Canada, the United States, Brazil, and Spain.
Restructuring
In light of weak demand in the chemicals sector, SABIC is moving toward selling its lower-yield operations and focusing on its core operations.
Aramco owns 70% of SABIC, which in turn is reducing costs and selling assets as part of efforts to cut capital expenditure amid falling oil prices and shareholder dividends.
SABIC CEO Abdulrahman bin Saleh Al-Fageeh said, "The two transactions represent an extension of the business portfolio improvement program we launched in 2022, which included previous steps such as divesting from functional model operations and Hadeed and Alba companies."
Last year, the company also mentioned that it was exploring strategic options for its National Industrial Gases Company, including an initial public offering, as part of a comprehensive review of its operations.
"The divestitures are expected to enhance the company's performance by improving profit margins.. and increasing free cash flow generation and supporting a higher return on capital employed, enabling the company to improve capital performance and align its profitability aspirations based on a business portfolio that achieves added value," said the company.
SABIC received advisement from Goldman Sachs in the SABIC Europe deal, while J.P. Morgan served as advisor in the thermoplastic engineering operations deal. Lazard acted as the independent financial advisor in both transactions.
