Saudi International Petrochemical Co. (Sipchem) and Sahara Petrochemical Co. signed today a non-binding memorandum of understanding (MoU) to carry out a merger, both firms said in statements to Tadawul.
The petrochemical firms have reached a preliminary agreement on the valuation, pending further due diligence and signing the final deal, including reaching an agreement on several related commercial issues.
Under the MoU, Spichem will fully acquire Sahara through share swap, issuing 0.8356 new shares for every share held by Sahara’s shareholders.
Sipchem will increase its shares to 733,333,332 shares, divided equally between its shareholders and those of Sahara.
The two firms agreed on Feb. 28, 2019 as the deadline for finalizing the deal, unless they agree to extend it, the statements said.
The planned merger has related parties that will be revealed later, along with any significant updates that may occur.
The deal, which is still pending regulatory approvals, is expected to have a positive impact on both firms’ strategic goals such as diversifying their product mix and raw material supply, strengthening their competitiveness and production capacity and increasing their outreach and growth, both locally and internationally.
The deal will likely increase revenues and cut cost, the statements said.
Sipchem in March said it would resume merger discussions with Sahara, following changes in the merger and acquisition (M&A) regulatory framework.
The two companies signed a non-binding memorandum of understanding to start talks for a potential merger in December 2013. However, the negotiations were called off in June 2014, citing “inadequate regulatory framework.”
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Sipchem and Sahara’s Planned merger |
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Share-swap |
Sipchem will issue 0.8356 share for every share held by Sahara shareholders |
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Spichem’s shares after the merger |
733,333,332 |
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Shares owned by Sahara shareholders after merger |
366,666,666 shares (50%) |
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Shares owned by Spichem shareholders after merger |
366,666,666 shares (50%) |
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