The Saudi Basic Industries Corporation (Sabic) announced the signing of 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.

Khalid Al-Dabbagh, Chairman of the Board of Directors of Sabic, said: “The Board endeavored to achieve these transactions, which represent a significant milestone in the execution of our strategy to further optimise our portfolio and maximise 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 Optimisation Programme, 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”.

“I am pleased that both Aequita and Mutares will work with us in the future to ensure that we continue to serve our global customers in a seamless manner,” Al-Fageeh also stated.

Salah Al-Hareky, Chief Financial Officer of Sabic, said: “These transactions are a clear demonstration of our disciplined approach and decisive execution regarding capital allocation and active portfolio management. By unlocking value to fund higher-return opportunities, we are improving the quality and efficiency of our capital employed and enhancing the group’s ROCE over time. Together, these actions position SABIC to deliver sustainable returns and create value for our shareholders.”

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 optimise capital and align its profitability aspirations with a value-accretive portfolio.

Importantly, both transactions will allow Sabic to maintain strategic access for its products through exports to both Europe and the Americas, which remain priority markets for the Company. Furthermore, Sabic’s leadership in global research, and advanced technology and innovation will be preserved, supporting effective customer service and sustainable growth.

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 Uk; Geleen, the Netherlands; Gelsenkirchen, Germany; and Genk, Belgium.

Dr Axel Geuer, President & Co-CEO of Aequita, said: “This transaction represents a further step in the expansion of our European chemicals platform. The assets are highly synergistic with the olefins and polyolefins business we recently acquired from LYB; with complementary markets, infrastructure and operational capabilities, we see substantial potential to realise synergies and drive operational improvements across both businesses. Under Aequita’s active ownership model, our focus will be on supporting the teams on the ground, ensuring a seamless integration, and building a scaled, competitive platform positioned for long-term, sustainable value creation.”

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, in addition to an agreed earn-out mechanism that could generate further value to Sabic based on the business’ free cash flow generation over the next four years, as well as in the event of a future sale of the business by Mutares.

Sabic’s Americas and European ETP business produces polycarbonate (PC), polybutylene terephthalate (PBT), and acrylonitrile butadiene styrene (ABS) resin and compounds, and manages manufacturing sites, including in Mt. Vernon, Ottawa, Bay St. Louis and Burkville, United States; Tampico, Mexico; Campinas, Brazil; Cartagena, Spain; and Bergen op Zoom, the Netherlands.

Robin Laik, co-Founder and CEO of Mutares, said: “The Engineering Thermoplastics (ETP) business in the Americas and Europe has a highly skilled workforce and strong customer relationships. Under focused ownership, our priority is to ensure continuity, support employees through the transition, and unlock the full potential of our asset base as a standalone ETP platform.” -TradeArabia News Service