Saudi Aramco to sell marine unit for $1.3bn
Dhahran, June 27, 2012
State oil giant Saudi Aramco said it has signed an agreement to sell its marine unit, Vela International Marine Limited, to Saudi National Shipping Company (Bahri) for $1.3 billion in cash and shares.
This merger of ships, personnel and business systems from Vela and Bahri along with management responsibility for Aramco’s very large crude carrier (VLCC) transportation system will be implemented within the corporate structure of Bahri, said a top official on Wednesday.
'By creating a new global leader in shipping, Aramco hopes to build a strong company that can leverage its capabilities in shipping sector and would meet its growing business portfolio,' remarked Khalid A. Al-Falih, the president and CEO of Saudi Aramco.
With 77 vessels in its fleet following the transaction — 32 VLCCs, 20 chemical tankers, 5 product tankers, 4 roll-on roll-offs (ROROs) and 16 vessels under-construction — Bahri would become the fourth-largest owner of VLCCs globally, creating a platform for continued economic growth and human capital development in the Kingdom.
It would also expand the ability of Saudi Aramco and the Kingdom to meet future maritime transport needs for its expanding downstream businesses while continuing to reliably and efficiently serve the current customers of both companies, said Al Falih.
Through the contemplated transaction, Bahri would be the exclusive provider of VLCC crude oil shipping services to Saudi Aramco under a long-term agreement and would take responsibility for maintaining reliable crude transportation at all times.
Furthermore, the two companies plan to explore ways to expand their co-operation in the maritime sector. JP Morgan is advising the shipping firm while HSBC's Saudi arm is acting for Aramco.
As per the deal inked on Wednesday at Dhahran, the parties will work together to insure a smooth transition and the seamless integration of their operations.
Saudi Aramco shall continue to manage all crude oil marketing and sales directly with its customers, and Bahri will provide reliable transportation services to Saudi Aramco on commercial terms.
“This is a transformational step for Bahri to strengthen its strategic partnership with Saudi Aramco and offers expanded future growth opportunities to create long-term value for our shareholders, said Bahri chairman Abdullah Al-Rubaian after signing the deal with Saudi Aramco senior VP Khalid G. Al-Buainain, who also serves as chairman of Vela.
'By creating a new global leader in shipping, Aramco hopes to build a strong company that can leverage its capabilities in the shipping sector and would meet its growing business portfolio,' remarked Al Falih.
Al-Rubaian said the new company in turn will serve as a national champion that will promote the development of a thriving national maritime industry that creates jobs and other long-term opportunities for the Kingdom.
According to Al-Buainain, Aramco has taken great pride in building a major shipping company from scratch, and it is especially pleased to be growing that company into a diversified entity that operates across the sector.
'Our long-term strategy is to create a global maritime leader with the commercial and financial strength to provide safe and reliable shipping services that meet Saudi Aramco’s long-term strategic needs,” said Al-Buainain, who is also senior VP of Downstream at Saudi Aramco.
Bahri CEO Saleh Al-Jasser said, 'We strongly believe that the proposed transaction presents Bahri with a unique opportunity to further diversify its business model and reinforces our ability to satisfy Saudi Aramco’s transportation needs as well as continuing to serve other customers.'
As per the deal, Bahri will pay Vela $1.3 billion in total, made up of $832.75 million in cash and 78.75 million new Bahri shares at a price of 22.25 riyals ($5.93). Bahri said it will raise the cash portion through debt financing.-TradeArabia News Service