As part of a restructuring during a recession in the industry, 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 $950 MM.
In early trading in Riyadh on Thursday, shares of the chemicals company plummeted as much as 4.8% to 48.2 riyals ($12.85), their lowest level in nearly 17 years. The stock has fallen 26.4% in the last year.
SABIC has agreed to sell its European petrochemical (EP) business, including production facilities in the United Kingdom and Germany, to Munich-based investment group AEQUITA for $500 million.
It is also selling its ETP business in the Americas and Europe to German holding company Mutares for $450 million. The company has manufacturing facilities in Canada, the United States, Brazil, and Spain.
As the chemicals industry experiences poor demand, SABIC is divesting low-return activities and focusing on core chemical operations.
It is 70% controlled by the oil giant Aramco, which is reducing expenses and selling assets to balance capital expenditures with decreased oil prices and shareholder dividends.
“These transactions represent a continuation of our portfolio optimization 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 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 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 minimize 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.
