Saudi Ara­bia’s Sipchem, Sa­hara Petro­chem­i­cals ink $2.2bn merger deal

Sa­hara Petro­chem­i­cals an­nounced that it has en­tered into an MOU with Sipchem to ef­fect a busi­ness com­bi­na­tion in a trans­for­ma­tive trans­ac­tion in the petro­chem­i­cals sec­tor in Saudi Ara­bia

Refining & Petrochemicals Middle East - - NEWS -

Pur­suant to the terms of the MOU, Sa­hara and Sipchem have reached a pre­lim­i­nary, non­bind­ing agree­ment on val­u­a­tion, sub­ject to com­ple­tion of con­fir­ma­tory due dili­gence, fi­nal­i­sa­tion of a bind­ing im­ple­men­ta­tion agree­ment, in­clud­ing agree­ment on cer­tain com­mer­cial is­sues.

Un­der the terms of the MOU and in or­der to im­ple­ment the pro­posed trans­ac­tion, Sipchem, fol­low­ing the ex­e­cu­tion of the bind­ing im­ple­men­ta­tion agree­ment, will make an of­fer to all Sa­hara share­hold­ers to ac­quire all their shares in Sa­hara.

Sipchem will is­sue, and each Sa­hara share­holder will re­ceive, 0.8356 new Sipchem shares for each Sa­hara share held by them. The pro­posed trans­ac­tion will re­sult in Sipchem hav­ing an in­creased share cap­i­tal of 733,333,332 shares, of which 366,666,666 shares, rep­re­sent­ing 50% of the in­creased share cap­i­tal, will be held by Sa­hara share­hold­ers and 366,666,666 shares, rep­re­sent­ing 50% of the in­creased share cap­i­tal, will be held by Sipchem share­hold­ers. The ex­change ra­tio and the re­sult­ing own­er­ship split has been agreed as a re­sult of an ex­ten­sive mu­tual due dili­gence and val­u­a­tion ex­er­cise.

Pur­suant to the MOU, Sa­hara and Sipchem will con­tinue to ad­vance dis­cus­sions in re­la­tion to the pro­posed trans­ac­tion and work to­wards en­ter­ing into a bind­ing im­ple­men­ta­tion agree­ment no later than 28 Fe­bru­ary 2019, un­less the par­ties agree to ex­tend such pe­riod. The pro­posed trans­ac­tion is sub­ject to sev­eral ap­provals, in­clud­ing but not lim­ited to, the Cap­i­tal Mar­ket Au­thor­ity.

The pro­posed trans­ac­tion is ex­pected to pro­vide syn­ergy po­ten­tial, from both a rev­enue and cost per­spec­tive, which is ex­pected to drive value for share­hold­ers. It is also ex­pected to de­liver ben­e­fits to the com­bined work­force, and lo­cal and in­ter­na­tional busi­ness part­ners.

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