Saudi Arabia's SIIG and Petrochem plan merger through share exchange (updated)

Supreme Petrochem

28/09/2021 12:26

(Adds analysis from Arqaam)
    DUBAI, Sept 28 (Reuters) - Saudi Industrial Investment Group
(SIIG)  2250.SE  and the National Petrochemical Company
(Petrochem)  2002.SE  have signed a non-binding agreement on a
proposed merger, they said on Tuesday.
    The deal would involve a share exchange offer from SIIG to
acquire the 50% of Petrochem it does not already own, the
companies said in separate bourse statements.
    SIIG would pay Petrochem's shareholders by issuing new
shares in SIIG and Petrochem would be delisted.
    Petrochem's shareholders would receive 1.27 shares in SIIG
in exchange for each share they own in Petrochem.
    At a market price of 39.9 riyals per share of SIIG and 49.7
riyals for Petrochem, the exchange ratio implies a 2% premium
for Petrochem shareholders, Arqaam Capital said in a note.
    The potential merger will simplify shareholding structure
and sharpen focus on growth capital expenditure, it said. 
    SIIG has appointed HSBC Saudi Arabia as its financial
adviser while Petrochem is working with GIB Capital.
    The non-binding memorandum of understanding is subject to
the companies reaching a final agreement on terms of the deal.
    The two firms began talks last year over the merger, which
would mark further consolidation in the Saudi petrochemicals
sector, after oil giant Saudi Aramco  2222.SE  bought a 70%
stake in Saudi Basic Industries  2010.SE  last year.
    Petrochem has a market capitalisation of about $6.3 billion
and SIIG of about $4.8 billion. 
    The Saudi government has a 13.1% stake in SIIG and a 25%
stake in Petrochem, Refinitiv data showed. 
    

 (Reporting by Davide Barbuscia; editing by Stephen Coates and
Jason Neely)
 ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters
Messaging: davide.barbuscia.reuters.com@reuters.net))