Sipchem, Sahara blame regulatory framework for merger collapse

Updated 08 June 2014
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Sipchem, Sahara blame regulatory framework for merger collapse

JEDDAH: Saudi International Petrochemical Co. (Sipchem) and Sahara Petrochemical have called off their proposed merger, citing an inadequate regulatory framework in the Kingdom for the collapse.
The tie-up, which would have created a firm with a market capitalization of $5.7 billion at current values, would have been only the second ever example of a merger between two listed Saudi companies.
Talks have been ongoing since June last year between the two firms, with an announcement in December that a share-swap agreement was likely to be agreed in the first half of 2014.
However, in bourse filings on Sunday, the companies said that while they still saw a merger as in the best interest of shareholders, it couldn’t be achieved under the current regulatory regime.
“The companies reached a conclusion that it is difficult to implement this merger under the current regulatory framework using a structure acceptable to both companies where both companies will continue to exist whilst achieving operational integration,” the statement said.
They added talks had been postponed but they may look at different structures in future to see if a tie-up was possible.
The Capital Market Authority couldn’t immediately be reached for comment.
Saudi Arabia’s existing regulation on mergers and acquisitions was brought in by the CMA in 2007. Since then, there has been only one tie-up between listed firms: the 2009 merger by food group Almarai and Hail Agriculture Development Company.
“There’s limited precedent of such transactions between the two listed companies in Saudi Arabia... regulatory issues could have been a concern,” said Ankit Gupta, assistant vice president of research at NBK Capital.
Mergers across the Gulf are rare as consolidation is often scuppered by major shareholders who are unwilling to cede control of businesses except for very high price tags.
However, both firms have The Zamil Holding Co. Group, one of the Kingdom’s most prominent family businesses, as a significant shareholder and this was expected to help the process.


Oman regulator suspends KPMG from new auditing work over ‘irregularities’

Updated 14 November 2018
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Oman regulator suspends KPMG from new auditing work over ‘irregularities’

  • In Oman, KPMG is banned for one year from doing new auditing work for companies regulated by the CMA
  • It is another setback for KPMG, which is under scrutiny after losing clients in South Africa following its role in a high-profile corruption scandal there

DUBAI: Oman’s securities regulator said on Wednesday it has suspended audit firm KPMG from doing new work for a year after finding major financial and accounting irregularities at some listed companies.
The Capital Market Authority (CMA) took corrective steps at those companies to protect investors, it said in a statement without naming the firms or giving other details.
A review by the CMA “established professional negligence on the part of some audit firms that warranted disciplinary measures against them in the interests of the investors and other stakeholders,” the CMA said.
It is another setback for KPMG, which is under scrutiny after losing clients in South Africa following its role in a high-profile corruption scandal there and has faced investigations in Britain over its auditing of some clients.
In Oman, KPMG is banned for one year from doing new auditing work for companies regulated by the CMA, including listed companies, securities firms and insurers.
The penalty does not affect projects where KPMG has already been appointed, and KPMG has a right to appeal against the penalty before an independent authority, the CMA said.
KPMG said it could not immediately comment on the CMA’s statement.