The Saudi Basic Industries Corporation (SABIC) has inked two deals to sell its European petrochemicals (EP) operations, as well as its engineering thermoplastics (ETP) business in both the Americas and Europe.
SABIC will divest its EP business to AEQUITA, while its ETP business will be sold to MUTARES, with the combined enterprise value amounting to $950m.
These transactions form a crucial part of SABIC’s ongoing portfolio optimisation efforts aimed at driving long-term growth and enhancing shareholder value.
The sale of the EP division is valued at an enterprise value of $500m.
The business produces and markets ethylene, propylene, various polyethylene types, polypropylene and polymer compounds from facilities in the UK, the Netherlands, Germany and Belgium.
The ETP business sale is valued at $450m, with a potential earn-out mechanism based on future cash flow generation over four years.
This business includes polycarbonate, polybutylene terephthalate and acrylonitrile butadiene styrene production across sites in the US, Mexico, Brazil, Spain and the Netherlands.
Finalisation of these transactions is contingent upon standard closing conditions and regulatory approvals, including employee consultation where applicable.
SABIC asserts that it will maintain strategic access to European and American markets post-divestment.
SABIC Board of Directors chairman Khalid H. Al-Dabbagh said: “The board endeavoured to achieve these transactions, which represent a significant milestone in the execution of our strategy to further optimise our portfolio and maximise shareholder value by enhancing the company’s cash generation capacity and achieving the highest possible return on our global businesses.”
The divestments are expected to improve SABIC’s financial performance by increasing earnings before interest, taxes, depreciation and amortisation margins, boosting free cash flow and enhancing return on capital employed.
Goldman Sachs acted as financial adviser for the EP transaction, JP Morgan as financial adviser for the ETP transaction, Lazard as independent financial adviser, KPMG as accounting, carve-out and tax advisor, and A&O Shearman as legal adviser.
