Saudi state oil giant Aramco has finalized the purchase of a majority stake in petrochemicals major Sabic on the Saudi stock market, Reuters reported, buying over 2 billion shares in the company for a total of $69.1 billion.
Aramco signed the deal to buy 70 percent in Sabic from the Public Investment Fund of Saudi Arabia in March 2019, for the equivalent of US$69.1 billion in Saudi riyals at the time. The acquisition was part of Aramco’s preparation for going public, which happened, after much anticipation, at the end of last year.
Earlier this year, there were media reports that the oil giant may delay the purchase because of the coronavirus pandemic and the oil price collapse and there were even reports Aramco was potentially seeking to renegotiate the price of the deal as Sabic’s market cap plummeted by 40 percent. However, the price paid for the shares, which were bought this Sunday, is the same as the originally agreed one.
This may put an additional financial burden on Aramco, which has not been spared the fallout of the oil price crisis. As Reuters reported in May, the oil giant, which went public last December, is due to pay a dividend of some $75 billion to its majority shareholder, the Saudi government, but it does not have enough cash to cover the payment.
According to officials, however, things are looking up on the oil demand front. Earlier this month, oil minister Abdulaziz bin Salman said, as quoted by the Financial Times, that there were signs of “thriving” oil demand and as a result the company would raise its official selling prices for crude for July. The price increase was the sharpest in two decades but they were made from the deepest discounts in more than 30 years, almost erasing them.