Published On:June 22 2020
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Saudi Aramco completes $70bn takeover of Sabic.

Saudi Aramco has completed a deal it reached last year to buy a 70% stake in Saudi Basic Industries Corp. for around $70 billion, roughly equal to the chemical maker’s entire value now.

Aramco will pay Saudi Arabia’s sovereign wealth fund in several instalments between August this year and April 2028, the company said in a statement to the stock exchange in Riyadh. The first payment of $7 billion will be made on Aug. 2, Aramco said. The sovereign fund, known as the Public Investment Fund, will provide Aramco with a loan for the acquisition.

The deal effectively transfers cash from one arm of the Saudi state to another. It enables Aramco to accelerate its push to turn oil into products such as plastics, while giving the PIF more cash to pay for its burgeoning list of spending commitments both inside the country and abroad.

Aramco, the world’s biggest oil exporter, agreed in March last year to pay 123.4 riyals a share for the PIF’s stake in Sabic, the equivalent of $69.1 billion. The rest of the chemicals maker will remain listed on the Saudi stock exchange, where a small sliver of Aramco stock also trades. That will prevent Aramco from being able to fully integrate Sabic.

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