In a significant strategic move reflecting broader industry challenges, Saudi Basic Industries Corporation (SABIC) has finalized two major divestitures totaling $950 million in enterprise value. The Saudi chemical giant is restructuring its global portfolio in response to persistent market weakness and declining demand across the petrochemical sector.
The comprehensive divestiture program includes the sale of SABIC’s European Petrochemical (EP) business unit to Munich-based investment firm AEQUITA for $500 million. This transaction encompasses manufacturing facilities located in the United Kingdom and Germany. Simultaneously, the company has agreed to transfer its Engineering Thermoplastics (ETP) operations in both Europe and the Americas to German holding company Mutares for $450 million. The ETP business includes production sites across Canada, the United States, Brazil, and Spain.
This strategic repositioning occurs against a backdrop of notable financial pressure for SABIC. The company’s shares plummeted to a 17-year low during early trading in Riyadh, dropping 4.8% to 48.2 riyals ($12.85) per share. Over the past twelve months, SABIC has witnessed a substantial 26.4% decline in its stock value, reflecting investor concerns about the chemical industry’s prolonged slowdown.
CEO Abdulrahman Al-Fageeh characterized these transactions as a continuation of SABIC’s portfolio optimization initiative, which commenced in 2022. Previous divestments under this program included the Functional Forms, Hadeed, and Alba business units. The current disposals are projected to enhance SABIC’s core profit margins and strengthen free cash flow generation despite the challenging market conditions.
The restructuring aligns with the strategic direction of SABIC’s majority shareholder, oil behemoth Aramco, which maintains a 70% stake in the chemical company. Aramco has been implementing its own cost-reduction and asset-divestment strategy to balance capital expenditures against lower oil prices and substantial shareholder returns.
SABIC has engaged top-tier financial advisors for these transactions, with Goldman Sachs advising on the EP divestiture and J.P. Morgan consulting on the ETP transaction. Lazard acted as independent financial advisor for both deals. The company has committed to ensuring minimal operational disruption throughout the separation process.