Saudi Aramco is seeking to restructure a deal to buy a controlling stake in the Saudi Basic Industries Corporation (SABIC), following the SABIC devaluation of more than 40% after the collapse in oil prices and a pandemic Corona Virus. According to Reuters, Aramco agreed last year to buy 70 percent of SABIC from the Public Investment Fund for $ 69.1 billion in one of the largest deals in the chemical industry Global.
The transaction price is set at 123.39 riyals ($ 32.86) for each share in SABIC when it was announced in March 2019, but the stock is currently at about 70 riyals, where it has suffered a collapse Oil prices and Corona Sabic pandemic losses for the second consecutive quarter in the first quarter of the year.
The market value of SABIC is currently about $ 56.5 billion, so the market value of the stake that Aramco intends to purchase is $ 40 billion. Theoretically, Aramco will pay about 75 billion dollars in cash distributions to the Saudi government after its initial public offering last year, but analysts say that this free cash flow is not expected to cover this amount. . One of the sources, who has direct knowledge, said Aramco's Chairman and General Investment Fund Governor Yasser Al-Rumayyan is leading negotiations on Aramco and that the price will be reviewed. > Another source familiar with the transaction said that Aramco wants to reduce the burden on its financial statements. A public source and a separate source said that the Public Investment Fund was seeking to extend a ten billion dollar bridge loan signed with ten banks in October and linked to Aramco's acquisition of a stake in SABIC. . The fund said last year that the loan aimed to provide short-term financing for the fund for new investments and that it would be paid after the SABIC sale was completed. A SABIC spokesman said the stock purchase deal is between the fund and Aramco.Neither Aramco nor the Fund have yet responded to a request from Reuters for comment.
In a hypothetical press conference last week, SABIC Chief Executive Youssef Al-Bunyan said Aramco is committed to completing the acquisition of a controlling stake in SABIC by the second quarter of the year and he does not expect any Change in timeframe. The deal pumps billions of dollars into the fund and provides an asset to invest in deals abroad and the infrastructure at home to create jobs and diversify the resources of the largest Arab economy that depends on oil. >Reuters sources have previously reported that Aramco is raising a $ 10 billion loan to support the acquisition of SABIC.
