Saudi Industrial Investment Group and Petrochem in merger talks

Saudi Industrial Investment Group and Petrochem in merger talks

Saudi Arabian petrochemicals companies Saudi Industrial Investment Group (SIIG) and the National Petrochemical Company (Petrochem) have begun talks over a potential merger, they said on Sunday.

A deal would mark further consolidation in the Saudi petrochemicals sector after oil giant Saudi Aramco bought a 70 percent stake in Saudi Basic Industries in June.

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 percent of Petrochem but the two companies are similar in size, suggesting a deal would be a merger of near equals.

The two companies had combined assets of $9.5 billion as of June, Refinitiv data shows. SIIG had total assets of 19.2 billion riyals ($5.12 billion) at the end of June while Petrochem had 16.4 billion riyals in total assets.

Petrochem, whose market capitalization is $3.7 billion, has a larger market value than SIIG.

Shares of Petrochem were up 7.8 percent and SIIG was up nearly 5 percent in early trading.

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