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From: Mahmoud Salah Eddin
RIYADH: In a landmark transaction in the Middle East, Saudi Aramco acquired a 70% stake in SABIC for $ 69.1 billion.
This agreement is part of the Kingdom's plan to diversify its economy and reduce its dependence on oil, and to promote Aramco so that it becomes the leading manufacturer of energy and chemicals. integrated into the world by 2020.
"The agreement allows not only to win the three parties, the Public Investment Fund, Saudi Aramco and SABIC, but the main winner is the national economy," said Saudi Minister of Finance. 39, Energy, Khalid al-Falih.
According to analysts, among the overall benefits of the transaction, Saudi Aramco has become barely a year after offering its 5% stake.
Remarks of the Crown Prince
In an interview with Bloomberg in October 2018, Crown Prince of Saudi Arabia, Prince Mohammed bin Salman, said that the Aramco plan would be implemented and that the IPO would be completed. here 2021 and that after the completion of the transaction with SABIC in 2019. The company will need a full year before being able to proceed and sell the Aramco shares to investors.
On Wednesday, the Public Investment Fund signed an agreement with Aramco to acquire its entire 70% stake in SABIC for 259.125 billion riyals ($ 69.1 billion) at 123.4 riyals per share .
Aramco is no price
Sulaiman Al-Khataf, director of the Center of Excellence for Research and Refining at the University of Petroleum and Minerals King Fahd, said that to develop the petrochemical industry in the Kingdom and make Faced with the challenges of China and America, it was necessary to deal with Aramco-SABIC, as Saudi Arabia is changing, developing for the better and moving forward.
Al-Khattaf said the new Aramco is one of the world's largest oil and gas producers, one of the largest oil refiners, one of the largest producers of polyethylene , polypropylene, aromatics and glycol and one of the largest producers of methanol and urea. Invaluable.
"The petrochemical industry needs a constant supply of raw materials," he says on his Twitter page. "It's gas, gas liquids, naphtha and oil, and these are Aramco's products.
He explained that in implementing the agreement, the funds were transferred to the Public Investment Fund to be invested in new diversified projects, it is the most important thing in this matter: to go into a diversified world and not only in the oil sector.
The Kingdom is implementing a reform plan to reduce dependence on oil as part of the Kingdom's Vision 2030.
The value of SABIC equates to approximately 5% of Aramco
Sulaiman Al-Khattaf said that one of the benefits of the Saudi Aramco agreement is to benefit markets and customers and consolidate the various departments of both companies, such as accounting, procurement and projects , the "cost reduction", the unification of research centers and the issuance of patents, as well as foreign partnerships Kaxon, Dow and Total. Appropriate.
Al-Khattaf pointed out that SABIC represents about 5% of Aramco's capital, as 70% of this capital is estimated at 70 billion dollars, which means that SABIC is worth around 100 billion dollars and that 5% of that It is valued at $ 100 billion. .
"SABIC is not just an ordinary company, it's a giant holding company that holds stakes in 35 different giant companies, some in Saudi Arabia and outside of it," said Khalid Al Zaidi, Financial Analyst.
The transaction equals 12.5% of the Saudi stock market
Zaidi said that 70% of SABIC's share equals 12.5% of the Saudi stock market, according to market prices, and that the market value of 70% of SABIC's capital is 260.8 billion riyals, which is greater than the economies of some countries.
All bands benefit from the agreement, whether it is Aramco, SABIC or the Public Investment Fund, as well as the Saudi stock market, explains the financial analyst.
SABIC's market capitalization amounted to 372.6 billion SAR at the end of Wednesday's session, against 2.075 billion RS in the Saudi market.
The main building of the management of Aramco
Chief Executive Officer of Al-Safwa Mubasher Financial Services, Ihab Rashad, said the deal set a record in the history of Middle Eastern acquisitions and made it clear that the IPO of Aramco on international trade was imminent.
Rashad added that the transaction was providing a strong boost to Aramco's future operations, which would result in an increase in the value of Aramco after the transaction, in line with the future value of SABIC's projects.
(SABIC)
Turki Fadak, a member of the Saudi Economic Association, said the announcement of the agreement two weeks before the SABIC General Assembly was important.
He added that SABIC will witness a larger and more active movement than before, with the support of the new investor Aramco, which aims for horizontal and vertical integration in sectors, including advanced petrochemicals, or even business support. Aramco main ones. General, usually static.
Part of the signature of the agreement
The agreement will change radically
Saudi Energy Minister Khalid Al-Falih said Aramco's acquisition of 70% of SABIC was a historic and huge deal globally.
The agreement will bring a complete transformation leading to the creation of an integrated national energy and petrochemical company, which will lead the global energy sector and enhance the long-term growth potential of Saudi Aramco and SABIC ", did he declare.
appointments:
"SABIC signs an agreement with Saudi Aramco to facilitate the completion of the acquisition
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