SABIC Liquidates Subsidiaries

Move aimed at cost efficiency

07.01.2020 -

SABIC is liquidating three of its subsidiaries as part of its ongoing transformation program to become more agile and cost-efficient. In a statement to the Tadawul stock exchange on Dec. 31, the Saudi chemical producer said it will dissolve SABIC Industrial Catalysts, Saudi Carbon Fiber and Saudi Japanese Acrylonitrile.

The former two companies have a paid-in capital of 500,000 Saudi riyals each, while the third has a paid in capital of 171.23 million riyals. SABIC said it will continue to develop the companies’ products through other subsidiaries and does not expect the liquidation to have any financial impact.

In separate news, SABIC said it has entered into a share-purchase agreement with affiliate Saudi Arabian Fertilizer Company (SAFCO), under which the latter will acquire SABIC Agri-Nutrients Investment Company (SANIC) in exchange for shares. The move increases SABIC’s shareholding in SAFCO to 50.1% from 42.99%

SANIC was formed in 2018 as SABIC consolidated its equity shares and assets in several companies producing agri-nutrient products.

“The agreement, which is binding and subject to regulatory approvals, comes as a result of a shared vision to improve efficiencies through realization of synergies and maintaining a competitive edge in global markets. It is an important step in the journey toward meeting 2025 strategic targets, and is expected to accelerate Agri-Nutrients growth strategy, while increasing efficiency and maintaining customer intimacy,” commented SABIC vice chairman and CEO Yousef Al-Benyan.

Analysts from Egyptian investment bank EFG Hermes said the transaction “makes a lot of sense from a structural perspective as this would consolidate all the agri-nutrient investments under SAFCO, allowing SAFCO to focus on this business and add value to it, while SABIC can focus on its petrochemicals and speciality business.”

SANIC also owns 50% of National Chemical Fertilizers (Ibn Al-Baytar) and Jubail Fertilizer (Al-Bayroni) as well as 33.33% of Gulf Petrochemical Industries Company (GPIC).