Aramco to Acquire Additional Stake in Petro Rabigh for $702 Million
Riyadh – In a strategic move, energy giant Aramco is set to acquire an additional 22.5 percent stake in Rabigh Refining and Petrochemical Co., known as Petro Rabigh, from Tokyo-based Sumitomo Chemical for $702 million.
Majority Shareholder in Petrochemical Complex
Priced at SR7 ($1.86) per share, this acquisition will make Aramco the majority shareholder in the refining and petrochemical complex on Saudi Arabia’s west coast, increasing its stake to approximately 60 percent while reducing Sumitomo Chemical’s stake to 15 percent.
Strategic Expansion in Downstream Operations
Previously, both Aramco and Sumitomo Chemical each owned 37.5 percent of Petro Rabigh, which was listed on the Saudi Exchange in 2008. The move is part of Aramco’s strategy to expand its downstream operations and align with Sumitomo Chemical’s shift from commodity chemicals to specialty chemicals.
Enhancing Profitability and Balance Sheet
According to Hussain Al-Qahtani, Aramco senior vice president of fuels, this acquisition is expected to improve Petro Rabigh’s balance sheet and cash liquidity, along with enhancing the profitability of the company. Aramco will match Sumitomo’s $702 million investment, bringing the total financial injection to $1.4 billion to support Petro Rabigh’s future strategy.
Phased Waiver of Shareholder Loans
Both Aramco and Sumitomo Chemical will implement a phased waiver of $750 million each in shareholder loans, reducing Petro Rabigh’s liabilities by $1.5 billion. Seiji Takeuchi, Sumitomo’s chemical senior managing executive officer, expressed confidence that this transaction will significantly enhance Petro Rabigh’s financial position.
Expected Regulatory Approvals
The transaction is subject to customary closing conditions including regulatory approvals and other third-party approvals. Under the terms of the share sale and purchase agreement, all proceeds received by Sumitomo Chemical from the sale will be injected into Petro Rabigh, through a mechanism to be agreed with Petro Rabigh.