Saudi Arabia's Sabic has agreed to sell two businesses in Europe and the Americas for a total value of $950 million, accelerating its withdrawal from foreign assets as low oil prices squeeze petrochemical margins.
Sabic, one of the Middle East's largest companies, will sell its European petrochemicals unit to Munich-based family office Aequita for $500 million and its engineering thermoplastics business in the Americas and Europe to German private equity investor Mutares for $450 million, the company said on Thursday.
The thermoplastics deal also includes an earnout tied to free cash flow over the next four years and on any future sale of the assets. In an earnout, part of the purchase price is paid later, depending on the business performance of the entity post-sale.
The divestment is part of a broader trend among chemical players such as Sabic, Dow, Exxon, LyondellBasell, TotalEnergies and Versalis to reduce their European footprint due to the high costs of processing in the region.
Naphtha-based crackers in Europe and Asia face variable cost disadvantages compared to gas-based producers in the Middle East and the US, consultancy Wood Mackenzie said in a report last year. Naphtha crackers run on oil-based feedstock, which is more expensive than the natural gas used in Middle East and US facilities.
Geopolitical tension, feedstock price volatility and the impact of US tariffs have all made Europe’s petrochemicals sector challenging to operate in for companies such as Sabic.
The Saudi chemicals company had previously exited its iron and steel business Hadeed; Bahrain’s aluminium smelter Alba; and its polycarbonate entity Functional Forms after starting a portfolio optimisation programme in 2022. Sabic said the transactions would boost cash flow, lift margins and improve return on capital.
It will allow the company to invest in new businesses where it has “clear and sustainable competitive advantages in a rapidly changing landscape”, chief executive Abdulrahman Al Fageeh said in a statement.
The divestment from its Americas engineering thermoplastics comes despite Saudi Arabia's pledge to invest more than $1 trillion in the US over the coming years following Crown Prince Mohammed bin Salman’s visit there in November.
Saudi entities have increasingly prioritised domestic projects aligned with the kingdom’s Vision 2030 programme.
The divested European petrochemicals business includes plants in the UK, Netherlands, Germany and Belgium. The engineering thermoplastics unit manufactures materials across sites in the US, Mexico, Brazil, Spain and the Netherlands.
Sabic is majority owned by Saudi Aramco and listed on the Tadawul stock exchange. Goldman Sachs advised on the European sale and JPMorgan on the thermoplastics divestment, with Lazard, KPMG and A&O Shearman also advising. Completion of the transactions is subject to regulatory approvals and employee consultations, the company said.
