Saudi’s Sipchem, Sahara to seek deals in US and Asia after merger

Saleh M. Bahamdan (R), Chief Executive Officer of Sahara Petrochemicals, shakes hands with Abdullah Al-Saadoon, Chief Executive Officer of Sipchem, at the headquarters of Sipchem in Khobar, Saudi Arabia, May 12, 2019. (File/Reuters)
Updated 14 May 2019
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Saudi’s Sipchem, Sahara to seek deals in US and Asia after merger

  • The new entity will have combined assets worth more than $5.9 bn, ranking 2nd after SABIC
  • Growth opportunities will be evaluated and prioritized after the combined entity’s management and board are appointed

KHOBAR, Saudi Arabia: Saudi International Petrochemical Co. (Sipchem) and Sahara Petrochemical plan to target acquisitions and joint ventures in the United States and Asia when their merger is completed in order to expand market reach, top executives said.
The new entity, Sahara International Petrochemical Company, will have combined assets worth more than 22 billion riyals ($5.9 billion), ranking second after the kingdom’s biggest petrochemicals firm, Saudi Basic Industries (SABIC).
“Combining Sipchem and Sahara will create an integrated petrochemical leader with an improved competitive position in Saudi Arabia and globally,” said Sahara CEO Saleh Bahamdan, who will also be CEO of the new entity.
“We are looking at opportunities in Asia and US markets for either acquisition or organic growth, JVs, and locally we are also exploring,” said Sipchem CEO Abdullah Al-Saadoon, who will be the new company’s chief operating officer.
Growth opportunities will be evaluated and prioritized after the combined entity’s management and board are appointed, both executives told Reuters in an interview, without giving further details.
Shareholders of the two firms will hold separate meetings on May 16 to vote on the merger in the last step before completion.
The duo called off a tie-up in 2014, citing an inadequate regulatory framework, but revived it in 2018 as consolidation gained momentum in the Saudi corporate sector as part of the government’s Vision 2030 drive to diversify the economy and boost the private sector to create jobs for a young population.
“The transaction comes in line with Vision 2030 goals to build national companies with strong local and international reach in a sector that has been identified as a priority for the future Saudi economy,” said Bahamdan.
The petrochemical sector, which produces chemicals using oil and natural gas as raw materials, is the backbone of the kingdom’s manufacturing sector. Its flagship is SABIC, the world’s fourth largest petrochemical firm, the majority of which was recently acquired by Saudi oil giant Aramco.
Sahara produces basic petrochemicals while Sipchem focuses on more high-value products. The tie-up will expand their product portfolio, increase purchasing power and reduce raw material costs, boosting competitiveness and sustainability.
“The merger between Sipchem and Sahara is expected to create synergies of 175-225 million riyals in recurrent EBITDA (earnings before interest, tax, depreciation and amortization) annually, coming from increased revenue and also optimising cost,” said Saadoon.
The synergies will start in the first year of completing the deal and will be fully realized in three years, Bahamdan said.
The two companies will have a shared services structure, including human resources, IT, finance, maintenance and technical services.
They will also have increased scale for procurement and boost cross-selling through 24 companies and affiliates offering 30 distinct petrochemical products, Bahamdan added.
Both Sipchem and Sahara have the Zamil Group, one of the kingdom’s most prominent family businesses, as a significant shareholder, along with the Saudi Arabian government.


Unaoil’s former Iraq partner pleads guilty to bribery

Updated 40 min 37 sec ago
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Unaoil’s former Iraq partner pleads guilty to bribery

  • It is the first guilty plea to result from a three-year investigation by the Serious Fraud Office into suspected bribery and money laundering
  • Unaoil is a Monaco-based oil and gas firm

LONDON: The former partner in Iraq for Unaoil, a Monaco-based oil and gas consultancy, has pleaded guilty to five counts of bribery in the first conviction in a three-year criminal investigation by Britain’s Serious Fraud Office (SFO).
Basil Al Jarah, 70, pleaded guilty on July 15 to conspiring to give corrupt payments in connection with the award of contracts to supply and install single point moorings and oil pipelines in southern Iraq, the SFO said.
Al Jarah’s conviction, which comes six months before three other defendants in the case face a criminal trial in London, was announced after a judge lifted reporting restrictions in a pre-trial hearing on Friday, the SFO said.
Ziad Akle, Unaoil’s former territory manager for Iraq and Stephen Whiteley and Paul Bond, who worked for Dutch-based oil and gas services company SBM (Offshore), have pleaded not guilty.
Akle, 44, has been charged with three offenses of conspiracy to make corrupt payments. Bond, a 67-year-old former senior sales manager with SBM (Offshore), and Whiteley, a 64-year-old former vice president of SBM (Offshore) and one-time Unaoil general territories manager for Iraq, Kazakhstan and Angola, each face two counts.
Sam Healey, a lawyer at JMW Solicitors who is representing Whiteley, said his client “strenuously denied” all alleged offenses.
“Mr Whiteley co-operated fully with the SFO as they opened their enquiries and will rigorously defend the charges,” he said.
Lawyers for Al Jarah and Bond declined to comment. A lawyer for Akle was not immediately available for comment.
A spokeswoman for Unaoil declined to comment, while SBM Offshore has said it is company policy to not comment on past or current employees.