Saudis weigh $4B deal for OCI assets, shares soar

A man walks past the headquarters of Saudi Basic Industries Corp (SABIC) in Riyadh, Saudi Arabia October 27, 2013. REUTERS/Faisal Al Nasser

Saudi Basic Industries Corp., the Middle East’s biggest petrochemicals maker, is exploring an acquisition of OCI NV’s methanol assets that would solidify its status as one of the world’s biggest producers of the chemical, people familiar with the matter said. The Saudi Arabian company has made an initial approach that valued OCI’s assets, which include plants in Texas and the Netherlands, at as much as $4 billion, the people said, asking not to be identified because the discussions are private. Preliminary discussions between Sabic, as the state-controlled firm is known, and OCI may not lead to an agreement, they said.

OCI said in a statement Monday it had received “inbound interest” for its methanol assets, without naming the party, and said it hasn’t made a decision. The Amsterdam-based firm didn’t provide any additional information. A representative for Sabic declined to comment.

OCI rose 15 percent to 24.04 euros at 4:20 p.m. in Amsterdam trading, giving the firm a market value of about 5.1 billion euros ($5.7 billion). The shares earlier jumped as much as 18 percent, their biggest intraday gain since 2013.

Saudi Arabia is hoping to tap into growth in demand for chemicals like methanol, and is seeking more acquisitions to speed expansion in refining and petrochemicals. State-owned Saudi Arabian Oil Co. is in talks to buy a majority stake in Sabic, which could be valued at as much as $70 billion, from the kingdom’s sovereign wealth fund.

Sabic and Switzerland’s Clariant AG are also discussing ways to combine their specialty chemicals businesses, Chief Executive Officer Yousef Abdullah Al Benyan said last month.

The OCI assets being discussed include: OCI Beaumont and its 50 percent stake in Natgasoline in Texas as well as BioMCN in the Netherlands, the people said.

Methanol is primarily used to make other chemicals, like formaldehyde, and derivatives used in adhesives, resins, paint removers and polyester fibers, according to OCI’s website.

CF Industries Holdings Inc. abandoned a planned $5.4 billion acquisition of OCI in 2016 after the U.S. introduced guidelines to curb tax inversions.

A version of this article appeared in the print edition of The Daily Star on March 05, 2019, on page 4.




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