Saudi Industrial Investment Group (SIIG) and National Petrochemical Company (Petrochem) started merger talks, which may create a new entity with 35.6 billion riyals in assets .
The SIIG board gave the nod to begin discussions about a potential transaction at its meeting on September 17, the company said in a statement to the Tadawul stock exchange, where its shares trade. SIIG already controls a 50 per cent stake in Petrochem.
Talks to “study the economic feasibility of merging the two companies” are at an early stage, SIIG said.
As of June 30, SIIG had about 19.2bn riyals of assets and Petrochem had 16.4bn riyals.
Petrochem confirmed initiations of talks in a separate bourse filing. Any deal agreed would be subject to the approval of shareholders from both companies and regulators.
The tie-up "makes a lot of sense with what is going on with the pandemic and demand decline ... regionally and globally," Nabil Rantisi, general manager for wealth management at Dubai-based Daman Investments, said.
"It is very much needed not only to increase efficiency," he said. "For some companies [in the industry it's a] survival issue. We all know the demand hasn't come back to what it was pre-pandemic."
An agreement has yet to be reached on the final structure of the potential deal, SIIG said.
"We think this merger, it's more of a swap," Mazen Al Sudairi, head of research at Al Rajhi Capital in Riyadh, said of the possible structure of the transaction.
"SIIG already owns [half of] Petrochem but they don’t have full control. They want to be 100 per cent shareholders," he added.
Shares of Petrochem climbed on Sunday climbed 6.78 per cent and SIIG ended trade with 5.48 per cent gain.
Petrochemical producers in the Middle East are increasingly looking to consolidate in a bid to gain scale as they face difficult market conditions. Profits are also under pressure amid a slump in prices and demand for their products.
Last year, Saudi International Petrochemical Company (Sipchem) completed its buyout of 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 2019. The $69.1bn (Dh253bn) deal was completed in June this year.
The Covid-19 pandemic, which disrupted global supply chains and tipped the world economy into a recession, has increased pressure on petrochemical producers. Overall demand for petrochemicals shrank 7 per cent between December 2019 and April 2020, according to the industry tracker ICIS. Over a full year period, demand will contract as much as 10 per cent on average, as a result of the pandemic, according to Boston Consulting Group.
A rise in demand for medical and personal care products has helped parts of the petrochemical industry, however, producers associated with sectors hit harder by the pandemic, such as construction and automotive industries, are struggling, S&P Global Platts said in its latest petrochemicals sector outlook report.
As the industry moves into the second half of 2020, renewed movement restrictions and a prolonged economic recession paint a "far from clear-cut" picture, according to S&P Global Platts.
SIIG, which has been trading on Tadawul since 2004, has 4.5bn riyals of paid-up capital. It 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 paid-up capital of 4.8bn riyals. The company owns a 65 per cent stake in Saudi Polymers, which produces petrochemical products.
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
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- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
The Bio
Hometown: Bogota, Colombia
Favourite place to relax in UAE: the desert around Al Mleiha in Sharjah or the eastern mangroves in Abu Dhabi
The one book everyone should read: 100 Years of Solitude by Gabriel Garcia Marquez. It will make your mind fly
Favourite documentary: Chasing Coral by Jeff Orlowski. It's a good reality check about one of the most valued ecosystems for humanity
UAE currency: the story behind the money in your pockets
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WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
Results:
5pm: Conditions (PA) Dh80,000 1,400m | Winner: AF Tahoonah, Richard Mullen (jockey), Ernst Oertel (trainer)
5.30pm: Handicap (TB) Dh90,000 1,400m | Winner: Ajwad, Gerald Avranche, Rashed Bouresly
6pm: Maiden (PA) Dh80,000 1,600m | Winner: RB Lam Tara, Fabrice Veron, Eric Lemartinel
6.30pm: Handicap (PA) Dh80,000 1,600m | Winner: Duc De Faust, Szczepan Mazur, Younis Al Kalbani
7pm: Wathba Stallions Cup (PA) Dh70,000 2,200m | Winner: Shareef KB, Fabrice Veron, Ernst Oertel
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UAE currency: the story behind the money in your pockets
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Profile
Company: Justmop.com
Date started: December 2015
Founders: Kerem Kuyucu and Cagatay Ozcan
Sector: Technology and home services
Based: Jumeirah Lake Towers, Dubai
Size: 55 employees and 100,000 cleaning requests a month
Funding: The company’s investors include Collective Spark, Faith Capital Holding, Oak Capital, VentureFriends, and 500 Startups.
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The specs
Engine: 2.0-litre 4-cylinder turbo
Power: 240hp at 5,500rpm
Torque: 390Nm at 3,000rpm
Transmission: eight-speed auto
Price: from Dh122,745
On sale: now
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The most expensive investment mistake you will ever make
When is the best time to start saving in a pension? The answer is simple – at the earliest possible moment. The first pound, euro, dollar or dirham you invest is the most valuable, as it has so much longer to grow in value. If you start in your twenties, it could be invested for 40 years or more, which means you have decades for compound interest to work its magic.
“You get growth upon growth upon growth, followed by more growth. The earlier you start the process, the more it will all roll up,” says Chris Davies, chartered financial planner at The Fry Group in Dubai.
This table shows how much you would have in your pension at age 65, depending on when you start and how much you pay in (it assumes your investments grow 7 per cent a year after charges and you have no other savings).
|
Age
|
$250 a month
|
$500 a month
|
$1,000 a month
|
|
25
|
$640,829
|
$1,281,657
|
$2,563,315
|
|
35
|
$303,219
|
$606,439
|
$1,212,877
|
|
45
|
$131,596
|
$263,191
|
$526,382
|
|
55
|
$44,351
|
$88,702
|
$177,403
|
MATCH INFO
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Power: 218hp (Cooper and Aceman), 313hp (Countryman)
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On sale: Now
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City's slump
L - Juventus, 2-0
D - C Palace, 2-2
W - N Forest, 3-0
L - Liverpool, 2-0
D - Feyenoord, 3-3
L - Tottenham, 4-0
L - Brighton, 2-1
L - Sporting, 4-1
L - Bournemouth, 2-1
L - Tottenham, 2-1
Brief scores
Toss India, chose to bat
India 281-7 in 50 ov (Pandya 83, Dhoni 79; Coulter-Nile 3-44)
Australia 137-9 in 21 ov (Maxwell 39, Warner 25; Chahal 3-30)
India won by 26 runs on Duckworth-Lewis Method
World ranking (at month’s end)
Jan - 257
Feb - 198
Mar - 159
Apr - 161
May - 159
Jun – 162
Currently: 88
Year-end rank since turning pro
2016 - 279
2015 - 185
2014 - 143
2013 - 63
2012 - 384
2011 - 883
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
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