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.


Philippines set to import 1.2 million tons of rice as caps removed

Updated 50 min 2 sec ago
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Philippines set to import 1.2 million tons of rice as caps removed

  • President Rodrigo Duterte in October ordered the ‘unimpeded’ importation of rice after the country’s inflation shot u
  • Lawmakers have approved the bill removing the import cap on rice imports and replacing it with tariffs

MANILA: Rice traders in the Philippines are set to import about 1.2 million tons of the staple food, a state grains agency spokeswoman told Reuters on Tuesday, as the Southeast Asian country lifts a two-decade-old cap on purchases.
Bigger rice purchases by the Philippines, already one of the world’s top importers and consumers of the grain, could underpin export prices in Vietnam and Thailand, traditionally its key suppliers.
Prices in Vietnam fell last week ahead of the country’s largest harvest this month, while the Thai market is likely to see additional supply toward the end of January from the seasonal harvest.
President Rodrigo Duterte in October ordered the “unimpeded” importation of rice after the country’s inflation shot up to 6.7 percent in September and October, the highest in nearly a decade, partly due to food prices.
The National Food Authority (NFA) has approved initial applications from 180 rice traders for permits to import a total of 1.186 million tons of either 5-percent or 25-percent broken white, the NFA spokeswoman said.
“We have not set any deadline for accepting applications to import rice. There’s no more limit,” she said.
Importers are allowed to bring in rice from any country, but grains from Southeast Asian suppliers will be charged a tariff of 35 percent while those from elsewhere will face a 50-percent charge.
Lawmakers have approved the bill removing the import cap on rice imports and replacing it with tariffs. Duterte will “most likely” sign it into law “soon,” presidential spokesman Salvador Panelo said on Tuesday.
Philippine inflation eased in November and December, and the rice tariffication law could help curb it this year by as much as 0.7 percentage point, the central bank has said. Rice is the biggest food item in the country’s consumer price index.