Sipchem and Sahara start merger talks

Updated 05 June 2013
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Sipchem and Sahara start merger talks

JEDDAH: Saudi Arabia’s Sahara Petrochemical and Saudi International Petrochemical Co. (Sipchem) said they had begun initial talks on a potential merger.
The Zamil Holding Company Group, one of the Kingdom’s most prominent family businesses, is a major shareholder in both companies.
A feasibility study will be carried out by the two companies over the next five months, with the plan then put to shareholders and the regulator for approval, separate statements from both companies to the Saudi stock exchange said.
No value for the potential merger was given.
Zamil, which has interests in petrochemicals, steel, housing, construction and other industrial sectors, owns 7.9 percent of Sahara and 9.6 percent of Sipchem.
The government pension fund also has holdings of more than 5 percent in both companies.
Sipchem announced a fall in first-quarter net profit by nearly 60 percent year-on-year to SR 64.5 million ($17.2 million) in April, which it attributed to planned plant shut-downs for maintenance.
Sahara’s net income in the same period tripled to SR 142 million.
Sipchem makes methanol, butanediol, tetrahydrofuran, acetic acid, acetic anhydride, vinyl acetate monomer, as well as carbon monoxide, its website says.
Sahara makes propylene, polypropylene, ethylene and polyethylene.


UAE’s ADNOC looks to smarten up the forecourt experience in Saudi Arabia

Updated 24 min 23 sec ago
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UAE’s ADNOC looks to smarten up the forecourt experience in Saudi Arabia

  • ADNOC's Oasis chain has 235 outlets in the Emirates, and it recently increased its profile in this business with a deal with French hypermarket group Geant to convert 10 stores to the world-famous brand.
  • ADNOC has 45 years experience of operating petrol stations in the UAE, and can be relied on to provide a top quality product on a fast roll-out schedule.

DUBAI: ADNOC Distribution’s new license in Saudi Arabia allows it to own, operate and manage fuel service stations, which could be a big thing for anybody stopping to fill up with gas, and grab a sandwich and coffee across the Kingdom in years to come.

ADNOC may look and sound like a petrol pumper, and a large part of its business is in supplying fuel to service stations as well as wholesale to big government entities and airlines.

But the most profitable and fastest growing segment consists of owning and running the retail outlets that are a big feature on station forecourts across the Arabian Gulf. It owns and operates more shops than any other retailer in the UAE, with a virtual monopoly across most of the country.

Its Oasis chain has 235 outlets in the Emirates, and ADNOC recently increased its profile in this business with a deal with French hypermarket group Geant to convert 10 stores to the world-famous brand. So, while motorists will still stop mainly for “special” or “super”, they will linger for KFC or McDonalds, or increasingly the high quality fresh food the French do so well.

It all makes a great deal of sense for Saudi citizens in the midst of a consumer revolution sparked by the Vision 2030 transformation of the economy. Female drivers, the logic goes, are even more likely than men to linger for a bit of shopping once they’ve filled up, or will want to get the family some snacks or even full dinner on the way home. All of which begs the question: why does it take a UAE company to see the market gap in the Kingdom?

With a car-crazy population of 30m, and an apparently inexhaustible appetite for fast food and shopping, surely there were local entrepreneurs who could take advantage of that market opportunity?

Part of the answer is that ADNOC has been doing it or a long time now, with 45 years of operating petrol stations in the UAE, and can be relied on to provide a top quality product on a fast roll-out schedule. The one station it is pledged to open this year will surely be followed quickly by others across the Kingdom. But the main reason lies in the highly fractured nature of the petrol station business in Saudi Arabia.

There are some big operators, but the national oil company, Saudi Aramco, does not enjoy the near monopoly that ADNOC does in the UAE. Many petrol stations are owned by smaller businesses that lack the scale, and the ambition, to aim for something bigger. The removal of fuel subsidies will give them flexibility to be more competitive on price for their basic product, while the entry of ADNOC may give them an inventive to give Saudi consumers what they increasingly want.

There is no doubt it is a potentially lucrative market. The retail side of the ADNOC business was the main reason the UAE company was able to achieve a market capitalization of more than 30 billion dirhams when it went public in an initial public offering in Abu Dhabi last year.