The Saudi Arabian Fertiliser Company (SAFCO) agreed to acquire a unit of Saudi Basic Industries Corporation (SABIC) to improve growth and look for new markets, the company said on Wednesday.
SAFCO will acquire 100% of SABIC Agri Nutrients Investment Company, which is valued at 4.59 billion Saudi riyals ($1.2 billion) by way of an increase in share capital and an issuance of shares to SABIC, according to a statement on Tadawul, where the company’s shares trade.
“This agreement comes as a result of the shared vision by SABIC and SAFCO, to enhance and improve efficiencies through consolidation and realisation of synergies,” SAFCO said.
“It also envisages considerable opportunities for growth and development of competitive advantages in the global marketplace, which serve SAFCO’s interests and enhances the rights of its shareholders.”
SABIC has a stake of 42.99 per cent in SAFCO, with the remaining 57.01 per cent held by the private sector and public. Following the acquisition of the nutrients business and the issue of new shares, SABIC’s stake in SAFCO will go up to 50.1 per cent, whereas existing shareholders’ ownership will be diluted to 49.9 per cent.
The parties agreed not to include SABIC’s share in both Ma’aden Phosphate Company and Ma’aden Wa’ad Al Shamal Phosphate Company in this deal, the statement said.
SAFCO, established in 1965, was the first petrochemical company in Saudi Arabia producing urea and ammonia. The company reported a total comprehensive income of 246.2 million riyals ($65.6 million) during the third quarter, down from 487.98 million riyals ($130 million) in the same period last year.