Saudi’s SABIC sells assets in Europe, Americas worth $950mn

Saudi Arabia’s SABIC has agreed to sell its European petrochemical business and its Engineering Thermoplastics business in Europe and the Americas for a combined enterprise value of US$950 million, as part of a restructuring during an industry slowdown.

Shares in the chemicals company fell as much as 4.8 per cent at 48.2 riyals (US$12.85) per share in early trade in Riyadh on Thursday, touching the lowest level in nearly 17 years. The stock has lost 26.4 per cent in the last 12 months.

SABIC has agreed to divest its European petrochemical (EP) business, which includes manufacturing sites in the United Kingdom and Germany, to Munich-based investment firm AEQUITA for an enterprise value of US$500 million.

It is also selling the ETP business in the Americas and Europe to German holding company Mutares at an enterprise value of US$450 million. The business operates manufacturing sites in Canada, the United States, Brazil and Spain.

Wider restructuring

SABIC is restructuring as the chemicals industry faces weak demand, divesting low-return operations and focusing on core chemical operations.

It is 70 per cent owned by oil giant Aramco, which is cutting costs and selling assets as it balances capital expenditure with lower oil prices and shareholder payouts.

“These transactions represent a continuation of our portfolio optimisation program, which started in 2022 and included previous actions, such as the divestment of Functional Forms, Hadeed and Alba,” CEO Abdulrahman Al-Fageeh said in a statement.

The company also said last year it was studying strategic options for its National Industrial Gases Company, including an initial public offering, as part of a broad review of its business.

The divestments announced on Thursday are expected to improve its overall core profit margins and free cash flow generation, the firm said, adding it “is committed to ensuring a seamless separation” and minimise disruption to ongoing operations.

Goldman Sachs advised SABIC on the EP transaction, while J.P. Morgan advised on the ETP deal. Lazard acted as independent financial advisor for both deals.