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

DUBAI (Reuters) – Saudi Arabian petrochemicals companies Saudi Industrial Investment Group (SIIG) and the National Petrochemical Company (Petrochem) said on Tuesday they had signed a non-binding agreement on a proposed merger.

The deal would consist of a share exchange offer made by SIIG to acquire the remaining 50% of Petrochem that SIIG did not already own, the companies said in separate bourse statements.

SIIG would pay Petrochem’s shareholders by issuing new shares in SIIG, which would result in a delisting of Petrochem’s shares.

Petrochem’s shareholders would receive 1.27 shares in SIIG in exchange for each share they owned in Petrochem.

SIIG has appointed HSBC Saudi Arabia as its financial advisor while Petrochem is working with GIB Capital.

The non-binding memorandum of understanding was subject to the companies reaching a final agreement on the terms of the deal, SIIG said.

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 bought a 70% stake in Saudi Basic Industries 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, according to Refinitiv data.

($1 = 0.2666 riyals)

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