Aramco Seals Takeover of Saudi Petchem Giant

Saudi oil giant Saudi Aramco has closed its $69.1bn purchase of a 70% stake in the country's petrochemicals giant Sabic from sovereign wealth fund PIF, it announced on June 17.

Aramco announced the takeover in March 2019, as part of a push to expand its gas-based petrochemicals segment to serve as a hedge against oil market volatility. Sabic boasts an annual petrochemicals production capacity of 62mn mt, dwarfing Aramco's own output of 17mn mt. And there are clear synergies between the pair: for one, Sabic uses subsidised gas supplies from Aramco as feedstock at its Saudi facilities.

The European Commission cleared the deal in February without demanding concessions, following similar unconditional support from regulators in India and other countries.

"We are excited to complete this transaction. It is a significant leap forward which accelerates Aramco's downstream strategy and transforms our company into one of the major global petrochemicals players," Aramco CEO Amin Nasser said in a statement.

Bloomberg reported in May that Aramco was in talks to stagger payments for the stake in Sabic and lower the deal's overall price tag. The transaction has already been restructured twice since it was first announced. Aramco did not say whether additional changes were made to the deal before it was closed.

Initially, Sabic will be a financial burden for Aramco, amid weak demand for petrochemicals products. Sabic reported its second quarterly loss in a row in January-March. These were its first losses in over a decade.