Saudi Aramco is in “very early-stage discussions” with Saudi Arabia’s Public Investment Fund (PIF) to acquire a stake in Saudi petrochemical maker SABIC, the company said on Thursday.
The statement follows media reports that Saudi Aramco last month already invited banks to pitch for an advisory role in the acquisition, which could help increase the company’s market valuation ahead of an IPO.
“Consistent with the company’s strategy of rebalancing its portfolio by moving further into downstream and the petrochemical sector in particular, the company has been evaluating a number of acquisition opportunities, both local and global,” the statement noted.
The negotiations with PIF regarding SABIC, the statement added, are “preliminary.”
“There is no certainty that any such transaction will take place,” it noted. “Saudi Aramco has no plans to acquire any publicly held shares of SABIC.”
SABIC – officially called the Saudi Basic Industries Corp – is the world’s fourth largest petrochemicals company, is 70 percent owned by PIF, and has a market capitalisation of $102.7 billion.
Late last year, it was announced that Aramco and SABIC signed an initial agreement to build a plant to process crude oil directly into chemicals, a project the partners estimate will have a final value of some $20 billion.
The complex, to process 400,000 barrels a day of crude oil when it starts operations in 2025, will help the kingdom diversify its economy away from crude exports, Aramco CEO Amin Nasser said at the time.
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