Saudi Basic Industries Corporation (SABIC) has announced the signing of two divestment transactions covering its European Petrochemicals (EP) business and its regional Engineering Thermoplastics (ETP) business in the Americas and Europe. The buyers are AEQUITA and Mutares respectively, and the combined enterprise value of the businesses involved amounts to USD 950 million. These steps form part of a broader portfolio optimization program aimed at long-term sustainable growth and improved profitability.
According to SABIC, the sale of selected operations is intended to refocus financial and management resources on higher-margin segments where the company holds a clear competitive advantage. The stated objectives include improving cash flow generation, increasing EBITDA margin and raising return on capital employed (ROCE), while maintaining continuity of customer service in key regions, including Europe and the Americas. The transactions do not affect SABIC’s research, technology and innovation activities, which remain core elements of the company’s strategy. SABIC intends to retain access to European and American markets through exports of its products and to uphold high standards of safety, reliability and compliance throughout the carve-out process and thereafter. Completion of both transactions is subject to customary closing conditions, required regulatory approvals and employee consultation where legally required.
Strategic importance of the transactions for SABIC
The divestments of the EP and ETP businesses are a central element in the execution of SABIC’s portfolio management strategy. The company emphasizes that these actions continue a portfolio optimization program launched in 2022, which previously included the divestment of the Functional Forms business, Hadeed and Alba.
Khalid H. Al-Dabbagh, Chairman of the Board of Directors of SABIC, stressed that the company’s management aims to strengthen cash generation and maximize shareholder value by improving the use of global assets.
"The Board endeavored to achieve these transactions, which represent a significant milestone in the execution of our strategy to further optimize our portfolio and maximize shareholder value by enhancing the Company’s cash generation capacity and achieving the highest possible return on our global businesses," said Al-Dabbagh.
Abdulrahman Al-Fageeh, Chief Executive Officer of SABIC, underlined that the sale of the EP and ETP businesses is consistent with previously defined strategic directions.
"These transactions represent a continuation of our Portfolio Optimization Program, which started in 2022 and included previous actions, such as the divestment of Functional Forms, Hadeed and Alba. This strategic approach allows us to actively reshape our portfolio and sharpen our focus on areas where SABIC has clear and sustainable competitive advantages in a rapidly changing landscape," Al-Fageeh stated.
Al-Fageeh also pointed to the importance of cooperation with the new owners in the area of customer relations.
"I am pleased that both AEQUITA and MUTARES will work with us in the future to ensure that we continue to serve our global customers in a seamless manner," he added.
The financial perspective of the transactions was outlined by SABIC’s Chief Financial Officer, Salah Al-Hareky.
"These transactions are a clear demonstration of our disciplined approach and decisive execution regarding capital allocation and active portfolio management. By unlocking value to fund higher-return opportunities, we are improving the quality and efficiency of our capital employed and enhancing the group’s ROCE over time. Together, these actions position SABIC to deliver sustainable returns and create value for our shareholders," said Al-Hareky.
The company expects that the planned divestment of selected petrochemical and engineering thermoplastics assets will improve the overall portfolio structure, including an increased share of higher-margin activities and better free cash flow generation. At the same time, SABIC states that it will work closely with the buyers to maintain operational continuity, customer service quality and existing safety standards.
Sale of the European petrochemicals business to AEQUITA
Under the first of the announced transactions, SABIC has agreed to sell its European Petrochemicals (EP) business to AEQUITA for an enterprise value of USD 500 million. The transaction covers operations that manufacture and market a broad portfolio of basic and downstream petrochemical products.
SABIC’s European EP business includes the production and sale of ethylene and propylene and a range of polyolefins: low and high density polyethylene (LDPE, LLDPE and HDPE), polypropylene (PP) and value-added polymer compounds. The unit operates several manufacturing sites located in key European chemical industry hubs, including Teesside in the United Kingdom, Geleen in the Netherlands, Gelsenkirchen in Germany and Genk in Belgium.
Dr.-Ing. Axel Geuer, President and Co-CEO of AEQUITA, stated that the acquired assets strengthen the group’s European chemicals platform.
"This transaction represents a further step in the expansion of our European chemicals platform. The assets are highly synergistic with the olefins and polyolefins business we recently acquired from LYB; with complementary markets, infrastructure and operational capabilities, we see substantial potential to realize synergies and drive operational improvements across both businesses. Under AEQUITA’s active ownership model, our focus will be on supporting the teams on the ground, ensuring a seamless integration, and building a scaled, competitive platform positioned for long-term, sustainable value creation," said Geuer.
Sale of the ETP business in the Americas and Europe to Mutares
The second transaction covers the sale of SABIC’s regional Engineering Thermoplastics (ETP) business in the Americas and Europe to Mutares. The agreed enterprise value is USD 450 million. In addition, the parties have agreed an earn-out mechanism that may generate further value for SABIC, depending on the free cash flow generation of the divested business over the next four years and in the event of a future sale of the business by Mutares.
SABIC’s regional ETP business in the Americas and Europe includes the production and sale of a range of engineering thermoplastics, including polycarbonate (PC), polybutylene terephthalate (PBT) and acrylonitrile butadiene styrene (ABS) in the form of resins and compounds. The unit manages manufacturing sites located in Mt. Vernon, Ottawa, Bay St. Louis and Burkville in the United States, in Tampico in Mexico, Campinas in Brazil, Cartagena in Spain and Bergen op Zoom in the Netherlands.
According to Robin Laik, co-founder and CEO of Mutares, the acquired business has significant development potential as a standalone ETP platform.
"The Engineering Thermoplastics (ETP) business in the Americas and Europe has a highly skilled workforce and strong customer relationships. Under focused ownership, our priority is to ensure continuity, support employees through the transition, and unlock the full potential of our asset base as a standalone ETP platform," Laik stated.
Closing conditions and business continuity
Both transactions are subject to customary closing conditions, including required regulatory approvals and employee consultation where mandated by law. Until completion, SABIC remains the owner of the assets and is responsible for the ongoing operation of the businesses.
SABIC states that during the transition period it will work closely with AEQUITA and Mutares to maintain operational continuity, customer service quality and high standards of safety, reliability and compliance. One of the company’s priorities is to minimize disruption to current operations and to preserve stable relationships with all stakeholders, including customers.
At the same time, despite the sale of certain production units, SABIC will remain present in the European and American markets through exports of its products. The company intends to maintain its leading position in research, advanced technology and innovation, which is expected to support long-term sustainable growth and effective service of its global customer base.
Transaction advisors and forward-looking statements
In the sale of the European petrochemicals business, SABIC was advised by Goldman Sachs as financial advisor. In the transaction concerning the ETP business in the Americas and Europe, J.P. Morgan acted as SABIC’s financial advisor. Lazard acted as independent financial advisor, while KPMG supported SABIC in the areas of accounting, carve-out and tax. Legal advice was provided by A&O Shearman.
SABIC noted that the communication regarding the transactions contains forward-looking statements relating to matters other than historical facts. These are based on current expectations, estimates, projections and assumptions of the company’s management and on information available at the time of publication. SABIC points out that such statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or developments to differ materially from those expressed or implied. The company gives no assurance that any forward-looking statements will be realized and undertakes no obligation to update or revise them, except as required by applicable law.
