State-owned oil company Saudi Aramco is seeking a review of the buying price for Saudi Basic Industries Corporation (SABIC) after its value dropped by 40 percent due to a slump in oil prices amid the coronavirus pandemic.
Last year, Aramco agreed to buy a 70 percent stake in SABIC from the Public Investment Fund (PIF). The deal was agreed at $32.86 per SABIC share, in March 2019.
Currently, SABIC is valued at around $56.5 billion, which means Aramco had to pay around $40 billion for its 70 stake in the company. However, as per the earlier agreement, Aramco has to pay about $75 billion in dividends to the Saudi government after its initial public offering last year.
The deal is expected to be completed in the second quarter of this year. SABIC CEO Yousef Al Benyan revealed the same and he further stressed that he did not see anything that changes this timeline.
SABIC, which is the world’s fourth-biggest petrochemicals company, suffered a second consecutive quarterly loss. The company said it will suspend all capital expenditures barring those for late-stage projects and necessary operations.
Depleting oil prices, lockdown due to the coronavirus pandemic and a global economic slowdown will only further impact SABIC’s profit and loss statement.
Earlier this month, the media reported that SABIC has established a joint venture company to build one of the world’s biggest utility-scale battery factories. SABIC unit Nusaned Investment has teamed up with SCHMID Group to develop the vanadium redox flow batteries. The Riwaq Industrial Development Company is also expected to join the joint venture.