Sipchem-Sahara merger gains ground with MoU signing

04 December 2013 17:40  [Source: ICIS news]

Saudi Arabia’s Sipchem, Sahara in advanced merger talksLONDON (ICIS)--A potential merger between Saudi Arabia Petrochemical Company (Sipchem) and Sahara Petrochemicals Company continues to gain traction, with Sipchem announcing on Wednesday that the two companies have signed a memorandum of understanding (MoU) to consider the feasibility of the deal.

The MoU allows the two Saudi Arabia-based companies to undertake due diligence and continue non-binding negotiations, Sipchem said. The latest stage of negotiations will involve examining the economic and technical feasibility of a merger, the company added.

According to Sipchem, the two companies anticipate being in a position to sign a merger agreement in the first half of 2014.

“The proposed merger... is expected to result in significant synergies related to operational efficiencies and the combined company would become a stronger platform for further growth in the long-term,” Sipchem said in a filing on Saudi bourse Tadawul.

If the merger were to be completed Sahara would become a subsidiary of Sipchem. The combined company would have over 667.24m issued shares, compared to Sipchem’s current total of 366.67m shares.

Sipchem would issue 0.685 new shares to current Sahara shareholders for every one outstanding Sahara share, meaning that it stands to issue 300.57m new shares to Sahara investors in exchange for all issued shares in the company.

Sahara’s share closed up 2.41% on Wednesday at SR19.15 ($5.11) per share.

Sipchem has retained HSBC Saudi Arabia as its financial advisor, Zeyad S Khoshaim Law Firm as its Saudi legal advisor, Allen & Overy as its international legal advisor, Jacobs Consultancy as its technical advisor and Nexant as its market consultant.

Sahara has appointed Morgan Stanley as its financial advisor, Al-Jadaan & Partners Law Firm as its Saudi legal advisor, Clifford hance as its international legal advisor, and IHS as its technical and market advisor.

($1 = SR3.75)


By: Tom Brown
+44 208 652 3214



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