SIIG, Petrochem Mull Merger through Share Exchange

Saudi Industrial Investment Group (SIIG) and the National Petrochemical Company (Petrochem) announced on Tuesday, a co-signing of a non – binding memorandum of understanding, through share exchange.

The deal would consist of a share exchange offer made by SIIG to acquire the remaining 50% of Petrochem that SIIG did not already own, the companies said in separate bourse statements.

SIIG has appointed HSBC Saudi Arabia as its financial advisor, while Petrochem is working with GIB Capital in relation to the possible deal.

Saudi Industrial Investment Group (SIIG) and the National Petrochemical Company (Petrochem) agreed in a non-binding manner under the memorandum of understanding that The structure of the implementation of the potential deal shall be through a share exchange offer made by SIIG (as the bidder) to Petrochem (as the offeree company) for the purpose of acquiring all the issued shares in Petrochem that are not owned by SIIG.

This is in exchange for issuing new shares in SIIG to Petrochem shareholders in accordance with article 26 of the Merger and Acquisition Regulations, which would result in the cancellation of Petrochem shares as a wholly owned company by SIIG.

The share exchange ratio for the potential deal shall be at (1.27), according to which Petrochem’s shareholders – in the event the deal is completed – will get (1.27) shares in SIIG for every share they own in Petrochem (“share exchange ratio”).

This comes in reference to the SIIG and Petrochem on the website of the Saudi Stock Exchange on 20-9-2020 regarding the approval of SIIG Board Of Directors to commence discussions with Petrochem in order to study the economic feasibility regarding the merger of the two companies’ businesses on 4/15/2021 regarding potential deal.

After the two companies conducted the necessary professional care studies and financial valuation for each party, the share exchange ratio measures were concluded.

It should be noted that the memorandum of understanding is a non-binding agreement, whereby the execution of the deal is subject to the agreement of the two companies on a final binding agreement setting out the terms and conditions of the deal.

All necessary regulatory approvals and the approval of the extraordinary General Assembly of the two companies on the deal and related issues shall be obtained.

All relevant details will be made public, in due course.

The parties seek to ensure that all requirements relating to the potential deal are met before the end of the current year, including signing the final binding agreement and obtaining regular approvals, thereby offering the potential deal to the shareholders of both the SIIG to Petrochem in accordance with the relevant laws and regulations.

SIIG to Petrochem will announce any substantive developments regarding the potential deal in accordance with the relevant laws and regulations.