In a strategic move, Saudi chemical major Sabic is set to divest its entire stake in Sabic Europe along with its Engineering Thermoplastics (ETP) business in Europe and the Americas. 

The Sabic Europe will be sold to Munich-based asset management firm Aequita at an enterprise value of SAR1.87 billion ($500 million), while the ETP business in the Americas and Europe will be snapped up by to Munich-based Mutares at an enterprise value of SAR1.68 billion ($450 million), said the Saudi-listed firm in a statement to Tadawul. 

Its ownership in Sabic Europe includes prominent production facilities located in Teesside (UK), Geleen (the Netherlands), Gelsenkirchen (Germany), and Genk (Belgium). 

Sabic’s European petrochemicals business operates world-scale facilities engaged in the production and marketing of ethylene, propylene, low- and high-density polyethylene (LDPE, HDPE), polypropylene (PP), and value-added polymer compounds.

The petchem major said it will also give up all associated commercial activities and infrastructure to Aequita’s unit, AEQH38, in Munich, Germany.

As part of the plan, Sabic will deconsolidate all European petrochemicals assets/operations from its group financials at the time of closing the transaction and Sabic Europe will be treated as discontinued operations in accordance with IFRS 5 in Sabic’s consolidated financials for 2025.

The Saudi chemical major said it expects the fair valuation of Sabic Europe to result in a non-cash loss of SAR10.8 billion, to be recorded in Sabic’s Q4 2025, based on the net assets to be transferred. 

This preliminary estimate will be subject to further substantiation for Sabic’s consolidated financial statements for the full year 2025.

The transaction reasons include strategic portfolio optimisation and capital recycling towards growth markets and businesses, improving Sabic’s return on capital by divesting low-return operations and enhancing profit margins and free cash flow.

The consideration will be settled entirely via two perpetual vendor notes repayable based on future cashflows, resulting from synergies between the divested Sabic business and other European olefins and polyolefins assets of Aequita, said the company in its bourse filing.

The deal is likely to close in Q4, subject to conditions that include separation of Sabic Europe from the Saudi petchem giant  and regulatory approvals.

Proceeds and future returns from the transaction will support Sabic’s growth strategy and ultimate value creation for its shareholders, it added.-TradeArabia News Service