Saudi Petrochemical Giant Has Team Scouring World for M&A Deals

(Bloomberg) -- Saudi Basic Industries Corp. is targeting acquisitions and partnerships with oil majors as the petrochemicals giant seeks to expand in faster-growing markets such as China and India, according to Chief Executive Officer Yousef Abdullah Al Benyan.

The CEO has a team scouting for potential M&A targets and Sabic is regularly in talks with companies such as Royal Dutch Shell Plc about investing in joint ventures, he said in an interview in Dubai on Monday. With the volatile oil price and demand booming for electric cars, crude producers are keen to diversify.

The plan builds on Sabic’s acquisition of a 25 percent stake in Switzerland’s Clariant AG earlier this year, and Al Benyan plans to use the alliance to further develop a portfolio of specialty chemicals, he said. The CEO was speaking at the Gulf Petrochemicals and Chemicals Association forum in Dubai, where a year earlier he and Clariant counterpart Hariolf Kottmann struck the deal.

“This is just the beginning, we want to be one of the top five specialty companies in order for us to maintain truly very strong competitive positions,” the CEO said. “We looked at different options. We cannot grow it just organically, we have to go through M&A activity.”

Aramco’s Deal

Set up about 40 years ago to capture lost value from flaring oil wells, Sabic has been a key element in Saudi Arabia’s plan to expand into petrochemicals.

The company’s current search for investments also fits the bill as Crown Prince Mohammed Bin Salman seeks to overhaul the largest Arab economy.

The company itself is the subject of an acquisition plan by state-owned Saudi Aramco, which is planning to buy the stake owned by the country’s sovereign wealth fund. Aramco has no plans to acquire any publicly held shares in Sabic.

The deal is expected to cost the oil giant about $70 billion, Prince Mohammed told Bloomberg in an interview last month. Al Benyan said he doesn’t expect the deal to affect the company’s plans.

“We are a publicly traded company and have other shareholders,” he said. “You have to focus on your current plan.”

The CEO also declined to discuss whether the political fallout from the murder of Saudi columnist Jamal Khashoggi would affect his company’s plans.

Sabic announced the Clariant deal in January. Shares in the Riyadh-based company have gained 13 percent this year, giving it a market value of 346 billion riyals ($92 billion.) Saudi Arabia’s benchmark Tadawul All Share Index increased 4 percent this year.

The company is also seeking to combat the growth in North America’s shale-gas industry, which has revitalized chemical plants in the region. A trade dispute between the U.S. and China also poses a threat.

China opened up its polymers market to Saudi Arabia in return for oil and gas supplies, and the Asian nation is now seeking to be more self-sufficient in plastics and chemicals used widely in consumer goods to car parts.

To contact the reporter on this story: Andrew Noël in London at anoel@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, John Bowker, Alaa Shahine

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