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Sahara Petrochemicals and Sipchem merger deal to create US$5 billion firm this year

Industry

A new firm, valued at US$5bn, will be announced as a result of Saudi Arabia’s Sahara Petrochemicals and Saudi International Petrochemical Company (Sipchem) share-swap merger in the first half of 2014

Companies’ sources said that an MoU relating to the merger was signed, although they added that this was not an announcement of an intention to make an offer.

Talks about a possible merger have been ongoing since June 2013, Reuters reported.

Incase the merger happens, Sahara Petrochemicals would become a subsidiary of Sipchem, with the latter offering 0.685 new shares in exchange for one Sahara Petrochemicals share, which is equivalent to 300.6mn new Sipchem shares.

At current market price, Sipchem is valued at US$2.8bn while Sahara Petrochemicals is worth US$2.19bn, according to Reuters data.

“The merger would enhance the company’s leading position in the local and international petrochemical industry as well as offering significant cost savings and providing a stronger platform for long-term growth,” statements from both the companies said.

Allen & Overy and Clifford Chance are legal advisers to Sipchem and Sahara Petrochemicals respectively.

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