Saudi Industrial Investment Group (SIIG) plans to merge with its unit National Petrochemical Co (Petrochem) and also to build a US$1.2 bln petrochem complex in 2012. Currently, SIIG owns 50% of Petrochem and produces around 1.3 mln tons of petrochemical products. A potential merger, expected to be completed within nine months, will create the third largest petrochemical firm in Saudi Arabia after Saudi Basic Industries (Sabic) and Saudi Kayan Petrochemical Co. Saudi Industrial has a market value of around $3 billion and Petrochem is valued at $2.9 billion, according to Reuters data.
'It does not make sense for us to have too many companies so we just want to collapse the two into one. We are in the process of soliciting offers now from banks then we will discuss and nominate consultants,' said SIIG's managing director Suleiman al-Mandeel. 'I'll give it six to nine months, if everybody agrees, the shareholders and the capital market authority,' he said.
SIIG expects production to rise to 6 mln tons after Petrochem's US$5.4 bln joint-venture with Chevron Phillips, called Saudi Polymers, starts production in the fourth quarter.