Aramco, a leading integrated energy and chemicals company, has reached a definitive agreement to acquire an additional 22.5% stake in Rabigh Refining and Petrochemical Co. (Petro Rabigh) for $702 million. This acquisition involves purchasing the stake from Sumitomo Chemical, a Tokyo-based firm. The complex, located on Saudi Arabia’s west coast, has seen both companies holding a 37.5% share each since its listing on the Saudi Exchange in 2008.
Increased Ownership and Financial Reconfiguration
Once the transaction is finalized at SAR7 per share, Aramco will become the largest shareholder of Petro Rabigh with approximately 60% equity, while Sumitomo Chemical will retain a 15% stake. The deal is contingent on customary closing conditions, including regulatory and third-party approvals. This move is part of a broader financial strategy aimed at reinforcing Petro Rabigh’s financial stability.
Financial Injection and Liability Reduction
The agreement stipulates that Sumitomo Chemical’s proceeds from the sale will be reinvested into Petro Rabigh. Additionally, Aramco will match this amount, injecting a total of $1.4 billion into the company to bolster its financial standing and support future strategies. Both Aramco and Sumitomo Chemical have also agreed to a phased waiver of shareholder loans amounting to $750 million each, leading to a direct $1.5 billion reduction in Petro Rabigh’s liabilities.
Strategic Goals and Future Outlook
These financial measures are expected to enhance Petro Rabigh’s balance sheet and cash liquidity. They are part of a remedial plan that includes refinery upgrades to improve business profitability. The transaction aligns with Aramco’s strategy to expand its downstream operations and Sumitomo Chemical’s shift from commodity to specialty chemicals.
Hussain A. Al Qahtani, Aramco’s Senior Vice President of Fuels, emphasized that this increased stake will facilitate closer integration with Petro Rabigh and support its turnaround strategy. Similarly, Seiji Takeuchi, Sumitomo Chemical’s Senior Managing Executive Officer, highlighted that the transaction aligns with both companies’ strategic goals and will significantly strengthen Petro Rabigh’s financial position.
