Mohamed Al-Mady, Vice Chairman and CEO of Saudi Basic Industries Corporation (SABIC) and Peter Huntsman, President and CEO of Huntsman Corporation (NYSE: HUN) today announced they have agreed terms under which SABIC will acquire 100 per cent of the shares of Huntsman Petrochemicals (UK) Ltd (Huntman’s European Base Chemicals and Polymers business) for a purchase price of US$ 700 million in cash. After the completion of the deal, SABIC intends to complete the construction of the 400kpta capacity polyethylene (LDPE) plant in Wilton, Teeside at an investment cost of US$150 million.
The acquisition marks a significant step in SABIC’s global growth plans. The Huntsman business adds substantial capacity to SABIC Europe and complements the group’s strong home base in the Kingdom of Saudi Arabia. On completion of the deal, all 830 Huntsman Petrochemicals (UK) Ltd employees will transfer to SABIC under the same employment conditions.
SABIC is the largest public company in the Middle East, ranked by market capitalization (more than US$ 100 billion), and one of the world’s 10 largest petrochemicals manufacturers. The company is among the world’s market leaders in the production of polyethylene, polypropylene, glycols, methanol, MTBE and fertilizers as well as the fourth largest polymer producer.
The acquired manufacturing business operates a 865 ktpa ethylene/ 400 ktpa propylene cracker and 1.3 million tpa Aromatics facilities with elaborate logistical facilities at Wilton and North Tees. The 400 ktpa LDPE plant, which is in the early stages of construction, is scheduled to come on stream by the end of 2007.
Commenting on the acquisition, Mr Al-Mady said, “The acquisition of Huntsman’s UK/European business is a major addition to the SABIC Europe group of companies and to SABIC’s business overall. This deal demonstrates our commitment to growing the SABIC business and the success of our globalization strategy.”
He continued, “We have achieved substantial growth in Europe in recent years, following the successful integration of DSM’s petrochemical business in 2002. The businesses we are acquiring at Wilton and North Tees add additional talented employees and offer further high quality production platforms to achieve our next stage of growth, and will add to our other sites in Europe in Geleen, Holland and Gelsenkirchen, Germany.”
“We are fully committed to realizing the full potential of these businesses and therefore we intend to invest and grow the business in the future, including the continued construction of the new polyethylene plant.”
Subject to the usual regulatory approvals, including merger control and UK Pension Regulator clearance, the transaction is expected to close by the end of 2006.
About SABIC
Saudi Basic Industries Corporation (SABIC) is the largest public company in the Middle East, ranked by market capitalization (more than US$ 100 billion), and one of the world’s 10 largest petrochemicals manufacturers. The company is among the world’s market leaders in the production of polyethylene, polypropylene, glycols, methanol, MTBE and fertilizers as well as the fourth largest polymer producer.
SABIC’s profit rose to a record SR 19.2 billion (US$ 5.1 billion) in 2005, a 35% increase on 2004 and the company’s highest profit since inception. Sales revenues for 2005 totaled SR 78.3 billion (US$ 20.8 billion), making SABIC the largest and most profitable public company in the Middle East.
SABIC operates six interlinked strategic business units: Basic Chemicals, Intermediates, Polyolefins, PVC and Polyester, Fertilizers and Metals. The company has significant research resources and has dedicated Research and Technology centers in Riyadh, Geleen in the Netherlands, Houston USA and Vadodara in India. SABIC has more than 17,000 employees worldwide.
SABIC has two large production sites in Saudi Arabia – in Al-Jubail and in Yanbu – comprising 18 world-scale complexes. Some of these complexes are operated with multi-national joint venture partners such as Exxon Mobil, Shell and Mitsubishi Chemicals. SABIC’s overall production capacity has increased from 35.4 million metric tons in 2001 to 46.7 million metric tons of production in 2005.
Headquartered in Riyadh, SABIC was founded in 1976 when the Saudi Arabian Government decided to use the hydrocarbon gases associated with its oil production as the principal feedstock for production of chemicals, polymers and fertilizers. The Saudi Arabian Government owns 70% of SABIC shares with the remaining 30% held by private investors in Saudi Arabia and other Gulf Cooperation Council countries.
SABIC Europe, headquartered in Sittard, the Netherlands, employs nearly 2,450 people and operates two petrochemical production sites in Geleen, the Netherlands and Gelsenkirchen in Germany for the production of polypropylenes, polyethylenes and liquid hydrocarbons. These are marketed by its European network of sales offices and logistical hubs. In 2005, SABIC Europe produced 2.5 million metric tons of polyolefins and 3.1 million metric tons of basic chemicals, mainly for the European market.
About Huntsman
Huntsman is a global manufacturer and marketer of differentiated and commodity chemicals. Its operating companies manufacture products for a variety of global industries, including chemicals, plastics, automotive, aviation, textiles, footwear, paints and coatings, construction, technology, agriculture, health care, detergent, personal care, furniture, appliances and packaging. Originally known for pioneering innovations in packaging and, later, rapid and integrated growth in petrochemicals, Huntsman today has 15,000 employees and 78 operations in 24 countries. The Company had 2005 revenues of $13 billion.
