Saudi Industrial Investment Group, Petrochem start merger talks

Author: Nurluqman Suratman


SINGAPORE (ICIS)--The Saudi Industrial Investment Group (SIIG) and Saudi Arabia’s National Petrochemical Co (Petrochem) have started talks over a potential merger, reviving a plan conceived nine years ago.

Petrochem's board of directors approved on 17 September to pursue initial talks with SIIG to "study the economic feasibility of merging the two companies".

SIIG mainly engages in industrial investment activities, particularly in petrochemicals.

It has a 50% stake in Petrochem, which controls 65% of the Saudi Polymers Company and of Gulf Polymers Distribution Company.

Saudi Polymers produces more than 1.7m tonnes/year of polymers at the Jubail Industrial City, which are marketed by Gulf Polymers.

"No agreement has yet been reached on the final structure of the potential deal. It should also be noted that entering into these discussions does not necessarily mean that the deal will take place between the two parties," Petrochem said in a filing to the Saudi bourse Tadawul on Sunday.

SIIG posted a full-year 2019 net income of Saudi riyal (SR) 606.3m ($162m), while Petrochem posted net income of SR674.5m.

Following the announcement of renewed merger talks, Petrochem shares closed 6.8% higher on Sunday, while SIIG shares surged 5.48%.

The potential merger follows Saudi Aramco's purchase of a majority stake in SABIC and Saudi International Petrochemical Co's (Sipchem) buyout of Sahara Petrochemical Co.

($1 = SR3.75)

Photo: An aerial view of a petroleum processing plant in Jubail, Saudi Arabia. June 2004 (Source: Str/EPA/Shutterstock)