Saudi Industrial Investment Group (SIIG) signed a non-binding preliminary agreement with National Petrochemical Company (Petrochem) to assess the feasibility of a potential merger of the two companies.
The transaction will be implemented through a share exchange offer by SIIG to acquire shares of Petrochem that it does not already own, the companies said in separate statements on Tuesday to the Tadawul stock exchange, where their shares are traded. SIIG already controls a 50 per cent stake in Petrochem.
Petrochem's shareholders will receive 1.27 shares in SIIG in exchange for each share they own if the transaction is approved.
"It should be noted that the MoU does not constitute a binding agreement, as the implementation of the transaction is subject to the two companies agreeing on a final binding agreement that determines the terms and conditions of the transaction," SIIG said.
The final binding agreement is further subject to regulatory approvals, the companies said.
Petrochemical producers in the Middle East have increasingly sought to consolidate over the past few years in an effort to gain scale amid market headwinds. A fall in oil prices, reduced demand and the impact of the pandemic have further pressured bottom lines.
In 2019, Saudi International Petrochemical Company (Sipchem) fully acquired the Saudi Sahara Petrochemical in a multi-billion dollar deal. Saudi Aramco, the world’s biggest oil producing company, also took a majority stake in the Middle East’s biggest petrochemicals producer, Saudi Basic Industries Corporation in the same year for $69.1bn.
SIIG and Petrochem had started merger talks last year in a bid to create a stronger entity with 35.6 billion Saudi riyals ($9.4bn) in assets.
If the deal with SIIG goes through, Petrochem's shares will be delisted from the Tadawul and the company will be a wholly owned unit of SIIG.
Petrochem appointed GIB Capital as its financial adviser, while HSBC is advising SIIG on the proposed transaction.
SIIG also owns a 50 per cent stake in both Saudi Chevron Phillips Company and Jubail Chevron Phillips Company.
Petrochem, which is based in Riyadh, has a 65 per cent stake in Saudi Polymers, which produces petrochemical products.
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What are NFTs?
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
THREE POSSIBLE REPLACEMENTS
Khalfan Mubarak
The Al Jazira playmaker has for some time been tipped for stardom within UAE football, with Quique Sanchez Flores, his former manager at Al Ahli, once labelling him a “genius”. He was only 17. Now 23, Mubarak has developed into a crafty supplier of chances, evidenced by his seven assists in six league matches this season. Still to display his class at international level, though.
Rayan Yaslam
The Al Ain attacking midfielder has become a regular starter for his club in the past 15 months. Yaslam, 23, is a tidy and intelligent player, technically proficient with an eye for opening up defences. Developed while alongside Abdulrahman in the Al Ain first-team and has progressed well since manager Zoran Mamic’s arrival. However, made his UAE debut only last December.
Ismail Matar
The Al Wahda forward is revered by teammates and a key contributor to the squad. At 35, his best days are behind him, but Matar is incredibly experienced and an example to his colleagues. His ability to cope with tournament football is a concern, though, despite Matar beginning the season well. Not a like-for-like replacement, although the system could be adjusted to suit.
