Saudi Arabian petrochemicals companies Saudi Industrial Investment Group (SIIG) and the National Petrochemical Company (Petrochem) have started initial discussions for a potential merger, both companies said on September 20.
SIIG and Petrochem announced in separate statements that they have begun talks to study the “economic feasibility” of merging the two companies.
The SIIG and Petrochem boards have approved initial discussions to study the feasibility of a merger but no agreement has been reached on any final structure of a merged entity, the companies said in separate statements.
SIIG owns 50% of Petrochem but reports suggest that the merger deal will be between near equals because both are similar in size.
“If the deal is agreed upon, this will be subjected to the conditions and approvals of the competent authorities, and the approval of the extraordinary general assembly of both companies,” said SIIG and Petrochem in separate statements.
A deal would mark further consolidation in the Saudi petrochemicals sector after oil giant Saudi Aramco bought a 70% stake in Saudi Basic Industries.
While SIIG owns 50% of Petrochem, the latter has a higher market value with $3.7 billion market capitalisation and the two companies have combined assets of $9.5 billion as of June.