Aramco Expands Stake in Petro Rabigh with $702 Million Acquisition
RIYADH — In a bold move, Aramco announced on Wednesday its definitive agreement to acquire an additional 22.5% stake in Rabigh Refining and Petrochemical Co. (Petro Rabigh) from Sumitomo Chemical for a whopping $702 million.
This strategic acquisition will skyrocket Aramco’s ownership to approximately 60%, solidifying its position as the largest shareholder in Petro Rabigh. Sumitomo Chemical, on the other hand, will retain a 15% equity stake in the company.
At present, both Aramco and the Tokyo-based Sumitomo Chemical each hold a 37.5% share in Petro Rabigh, a company that made its debut on the Saudi Exchange back in 2008.
The per-share price for this transaction is set at SR7 and is contingent upon meeting customary closing conditions, which include obtaining regulatory and other third-party approvals.
This move is part of a broader financial strategy aimed at fortifying Petro Rabigh’s financial health. The funds generated from Sumitomo Chemical’s stake sale will be reinvested back into Petro Rabigh.
Furthermore, Aramco has committed to injecting an additional $702 million into Petro Rabigh, matching Sumitomo Chemical’s contribution and totaling a massive capital injection of $1.4 billion.
As part of the deal, both Aramco and Sumitomo Chemical have agreed to gradually waive shareholder loans amounting to $750 million each, effectively slashing Petro Rabigh’s liabilities by $1.5 billion.
These strategic measures are geared towards strengthening Petro Rabigh’s balance sheet and liquidity, forming part of a comprehensive remedial plan that includes upgrading the refinery to enhance profitability.
The agreement perfectly aligns with Aramco’s downstream expansion ambitions and Sumitomo Chemical’s strategic pivot from commodity chemicals to specialty chemicals.
Hussain Al Qahtani, Aramco’s Senior Vice President of Fuels, expressed confidence in the increased shareholding, anticipating even greater synergy with Petro Rabigh to drive its turnaround strategy forward.
Seiji Takeuchi, Senior Managing Executive Officer at Sumitomo Chemical, underscored the transaction’s significance in bolstering Petro Rabigh’s financial standing amidst the rapidly evolving landscape of the refining and petrochemical sectors. — SG
