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
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.