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September 3
Saudi SABIC announced the sale of its entire stake in Saudi Hadeed Company to the Public Investment Fund, with a total value that may reach 12.5 billion riyals.
According to SABIC’s statement, conducting the transaction according to the so-called “deal completion calculations” mechanism means that the final price is determined on the date of completion of the deal, which is expected before the second quarter of 2024.
The Saudi Iron and Steel Company “Hadeed” manufactures steel products, including reinforcing bars, coiled wires, iron bars, steel plates and sections, hot and cold rolled pipes, galvanized pipes, printed pipes and hot film coated pipes.
Regarding the reasons for the deal, the Saudi Basic Industries Corporation (SABIC) said that it will enable it to focus and improve its core business. The liquidity of the deal will be used to enhance growth in the chemicals field.
According to the terms, at the same time, “Hadeed” will acquire 100% of the shares of Al Rajhi Steel Industries Company “Al Rajhi Steel” from Mohammed Abdul Aziz Al Rajhi and Sons Investment Company (Al Rajhi Investment); This is in exchange for increasing the capital and subscribing to new shares in “Hadeed”.
Ownership ratios
To complete the deals, conditions are required and official approvals are obtained from the relevant authorities. The ownership percentage of both the Public Investment Fund and Al Rajhi Investment Fund in Hadid Company will be determined according to the mechanisms for completing the deals mentioned in the relevant agreements.
The deals will support the efforts of the Public Investment Fund in contributing to the development of the local industry and meeting the growing local demand for iron products in the construction sector, vehicles, service facilities, renewable energy, transportation and logistics services, in line with the goals of the Kingdom’s Vision 2030.
The deals will bring together the high-quality facilities of the “Hadeed” and “Al Rajhi Steel” companies, in addition to benefiting from the administrative capabilities and technical and commercial expertise that they possess in the iron sector in the Kingdom, which will contribute to raising production capacity and increasing operational efficiency.
Deputy Governor of the Public Investment Fund, Yazid bin Abdul Rahman Al-Humaid, said: “The deals will combine the Fund’s financial capabilities and investment expertise in the sector, with the technical and commercial expertise of Al Rajhi Steel and Hadid companies, which will contribute to developing a national leadership system in the steel sector. It is also in line with the Fund’s role in creating strategic partnerships that contribute to empowering the private sector.”
SABIC CEO Abdul Rahman bin Saleh Al-Faqih said: “We realize that the company has great potential to become one of the most important iron and steel companies in the Gulf Cooperation Council countries. It was therefore important for us to complete the right deal, to enable the company to unleash its full potential. At the same time, this deal will enable SABIC to focus on its strategy, to become the preferred global leader in chemicals.”
The deals are in line with the Public Investment Fund’s strategy to empower 13 strategic sectors, including the metals and mining sector.
