Tribunal approves merger involving Saudi Arabian Oil Company And Saudi Basic Industries Corporation
In this transaction, Saudi Arabian Oil Company (SAOC) intends to acquire shares of Saudi Basic Industries Corporation (SABIC) from the Saudi Public Investment Fund. Post-merger, SAOC will control SABIC.
This is a multi-billion dollar international transaction that has been notified in several jurisdictions including South Africa, Russia and the Common Market for Eastern and Southern Africa (COMESA). The Tribunal has approved the merger without conditions.
SAOC controls several firms in different jurisdictions but does not control any firm in South Africa. SAOC and all the firms it controls are collectively referred to as “Saudi Aramco”. Saudi Aramco is primarily active in the exploration, production and marketing of crude oil and, to a lesser extent, in the production and marketing of refined products and petrochemicals.
Most of SABIC’s issued shares are held by the Public Investment Fund of Saudi Arabia while a small number of shares are publicly traded. It is active in the production and sale of commodity chemicals (including petrochemicals), intermediates, polymers (i.e. plastic), fertilizers and metals. SABIC controls several firms in various jurisdictions. Its sole subsidiary in South Africa is SABIC SA (Pty) Ltd, which only provides business support functions to SABIC. However, several of SABIC’s subsidiaries supply products to customers in SA.
Although there were concerns raised by competitors (Versalis and Sasol) in relation to the proposed transaction, the Commission concluded that the transaction – taken as a whole – is unlikely to result in a significant lessening of competition in any relevant market. The Commission was also of the view that the merger will not have a negative effect on public interest. It therefore recommended to the Tribunal that the merger be approved without conditions.
Gillian de Gouveia
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