Saudi Aramco To Buy SABIC Stakes In Biggest Ever Middle East Deal

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The world’s largest oil producer Saudi Aramco has agreed to buy a 70% stake in Saudi Basic Industries Corp (SABIC) from the kingdom’s wealth fund for $69.1bn in one of the biggest deals in the global chemical industry.

The remaining shares, traded on the Saudi stock market, aren’t part of the transaction, set to be the biggest ever deal in the Middle East.

The Sabic deal was proposed last year after the oil giant’s plans for an initial public offering were postponed. International investors baulked at Crown Prince Mohammed bin Salman’s $2 trillion valuations.

By channelling money from Aramco to the PIF, two arms of the Saudi state, the deal offered another route to the cash originally sought from the offering.

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Aramco plans to invest $500 billion over the next decade, and much of that will be on refineries and chemical plants. The company wants to secure future demand for its barrels, and acquiring control of the Middle East’s biggest chemical maker would bring it closer to its goal of becoming one of largest producers of raw materials used to make plastics.

Saudi Aramco may stagger payments for the Sabic acquisition, offering flexibility in how to finance the largest deal in the kingdom’s history, Al-Falih said in January. The company has very little debt and plans to issue bonds to fund at least part of the purchase.

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Saudi Aramco picked banks including JPMorgan Chase & Co, Morgan Stanley, Citigroup Inc, HSBC Holdings, National Commercial Bank to manage the bond sale, people familiar with the matter have said.

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