SABIC divests assets in Petchem and thermoplastics business for US$950M
The Saudi Basic Industries Corporation (SABIC) will make two strategic transactions to divest its European Petrochemicals (EP) business to AEQUITA and its Engineering Thermoplastics (ETP) business in the Americas and Europe to MUTARES, for a total combined enterprise value of $950 million.
Transaction: European Petrochemicals business
SABIC has agreed to sell its European Petrochemicals (EP) business to AEQUITA for an enterprise value of $500 million.
SABIC’s EP business produces and markets various products: ethylene, propylene, low- and high-density polyethylene (LDPE, LLDPE, and HDPE), polypropylene (PP), and value-added polymer compounds, and manages a number of manufacturing sites, including in Teesside, the United Kingdom; Geleen, the Netherlands; Gelsenkirchen, Germany; and Genk, Belgium.
Transaction: Engineering Thermoplastics business
SABIC has also agreed to sell its regional Engineering Thermoplastics (ETP) business in the Americas and Europe to MUTARES for an enterprise value of $450 million. The business operates production sites in Canada, the US, Brazil, and Spain, supplying specialty plastics used in sectors such as automotive, electronics, and industrial applications.
Sabic said that it is divesting lower-return businesses to focus on high margin markets and products where they have clear competitive advantage, recycle capital to higher-return opportunities and improve free cash flow, whilst continuing to serve its global customers and maximize shareholder value.
Commenting on the transactions, Chairman of the Board of Directors of SABIC Khalid H. Al-Dabbagh, said: “The Board endeavored to achieve these transactions, which represent a significant milestone in the execution of our strategy to further optimize our portfolio and maximize shareholder value by enhancing the Company’s cash generation capacity and achieving the highest possible return on our global businesses”.
Abdulrahman Al-Fageeh, Chief Executive Officer of SABIC, said: “These transactions represent a continuation of our Portfolio Optimization Program, which started in 2022 and included previous actions, such as the divestment of Functional Forms, Hadeed and Alba. This strategic approach allows us to actively reshape our portfolio and sharpen our focus on areas where SABIC has clear and sustainable competitive advantages in a rapidly changing landscape”.
These transactions reposition SABIC for longer-term success by refocusing financial resources and management attention towards growth areas where the Company has clear competitive advantages.
The divestments are expected to enhance SABIC’s performance, including through increasing overall EBITDA margins, improving free cash flow generation, and supporting higher return on capital employed (ROCE), enabling the Company to optimize capital and align its profitability aspirations with a value-accretive portfolio.
