Saudi Aramco is scheduled to conclude its purchase of 70% of petchems giant Sabic within barely 6 weeks. Terms of the deal were finalized in March 2019 (MEES, 29 March 2019), with Aramco agreeing to pay sovereign wealth fund PIF $69.1bn for its stake. The remaining 30% of Sabic is held by private investors and trades on the Tadawul.
Sabic’s market capitalization was $100bn when the agreement was finalized, but it has since hit choppy waters. Even prior to the coronavirus pandemic the deal was looking overpriced, and now with Sabic’s market cap hovering around $55bn (see chart), Aramco can be forgiven for experiencing buyer’s remorse. Especially given that the transaction has always appeared to be one pushed by the government rather than Aramco’s leadership. (CONTINUED - 612 WORDS)