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Saudi Arabian Oil Co (Saudi Aramco) Announces Purchase in the Amount of SAR 259.125 billion (US$ 69.1 billion), Equating to SAR 123.39 Price per Share, for 70% Stake in Saudi Basic Industries Corporation (SABIC) from the Public Investment Fund (PIF), the sovereign wealth Fund of Saudi Arabia

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Introduction Saudi Arabian Oil Co (Saudi Aramco) announces the completion of its share acquisition of a 70% stake in Saudi Basic Industries Corporation (SABIC) from the Public Investment Fund (PIF), the sovereign wealth fund of Saudi Arabia
Transaction Details Following the receipt of all necessary regulatory clearances in all pre-closing notification jurisdictions, on June 16, 2020, Saudi Aramco completed its acquisition of a 70% stake in SABIC from PIF.
Transaction Value The purchase price paid by Saudi Aramco for PIF’s 70% stake in SABIC is a sum of SAR 259.125 billion (US$ 69.1 billion). This equates to SAR 123.39 price per share
Transaction Terms On June 16, 2020, Saudi Aramco and PIF entered into an addendum to the share purchase agreement entered into by the parties on March 27, 2019 (the “Addendum”). Pursuant to the Addendum, the purchase price amount will be paid over several installments pursuant to a seller loan provided by PIF. Loan payments, which are represented by promissory notes, are payable between August 2, 2020 (being the first payment) and April 7, 2028 (being the last payment) as follows:

i. on or before August 2, 2020, an amount equal to US$ 7 billion;

ii. on or before April 7, 2021, an amount equal to US$ 5 billion;

iii. on or before April 7, 2022, an amount equal to US$ 8.5 billion plus a loan charge of US$ 500 million;

iv. on or before April 7, 2023, an amount equal to US$ 10.5 billion plus a loan charge of US$ 500 million;

v. on or before April 7, 2024, an amount equal to US$ 10.5 billion plus a loan charge of US$ 600 million;

vi. on or before April 7, 2025, an amount equal to US$ 10.5 billion plus a loan charge of US$ 800 million;

vii. on or before April 7, 2026, an amount equal to US$ 17.1 billion plus a loan charge of US$ 1.5 billion;

viii. on or before April 7, 2027, a loan charge of US$ 1 billion; and

ix. on or before April 7, 2028, a loan charge of US$ 1 billion.

Saudi Aramco has also agreed to make an advance payment of US$ 3 billion in April 2022 based on the occurrence of certain oil market conditions in 2021.

Parties of the Transaction Saudi Aramco and PIF.
Transaction Funding Method Saudi Aramco's overall approach to financing the SABIC transaction adheres to Saudi Aramco’s corporate financing strategy which is based upon prudence and financial flexibility while preserving Saudi Aramco's premium credit profile.

Saudi Aramco has funded the transaction through promissory notes issued to PIF at closing.

Transaction Execution Date 2020-06-16 Corresponding to 1441-10-24
Description of the Business of the Asset forming the Subject Matter of the Transaction SABIC is a global diversified chemicals company, headquartered in Riyadh, Saudi Arabia. SABIC manufactures on a global scale in the Americas, Europe, Middle East and Asia Pacific, making different products, including chemicals, commodity and high performance plastics, specialties, agri-nutrients and metals.
Financial Statements for the Last Three Years of the Asset forming the Subject Matter of the Transaction SABIC’s 2017-19 audited financial statements are available at www.sabic.com

Saudi Aramco will fully consolidate SABIC’s financial results. In accordance with its accounting policies, Saudi Aramco will account for three of SABIC’s affiliates, namely Al-Jubail Petrochemical Company (“KEMYA”), Saudi Yanbu Petrochemical Company (“YANPET”) and Eastern Petrochemical Company (“SHARQ”), as joint ventures and one affiliate, Saudi Methacrylates Company (“SAMAC”), as a joint operation. These affiliates have historically been fully consolidated by SABIC.

Transaction reasons The acquisition of the SABIC stake is consistent with Saudi Aramco’s long-term Downstream strategy to grow its integrated refining and petrochemicals capacity and create value from integration across the hydrocarbon chain.

It specifically enhances Saudi Aramco’s chemicals strategy by:

• Transforming Saudi Aramco into one of the major global petrochemicals players

• Integrating upstream and refining with SABIC

• Expanding capabilities in procurement, supply chain, manufacturing, marketing and sales

• Complementing geographic presence, projects and partners, and

• Increasing the resilience of cash flow generation with synergistic opportunities

Expected Impact of the Transaction on the Company and Its Operations As a member of the Saudi Aramco group, SABIC’s strategy will fully support Saudi Aramco’s strategy.

Saudi Aramco expects SABIC to benefit from integration with Saudi Aramco’s Upstream and Downstream refining and chemicals businesses and ability to invest in and execute major growth projects.

As a condition to the closing of the transaction, the SABIC bylaws were recently amended by the Extraordinary General Assembly of SABIC.

Saudi Aramco expects that SABIC’s dividend policy will continue to consider SABIC’s financial position, cash flows and investment plans, and enable SABIC to provide competitive dividends to shareholders while maintaining a strong financial position.

SABIC will be subject to applicable Zakat and Tax regulations and associated disclosure requirements.

It is expected that the transaction will provide growth opportunities that are expected to enhance career opportunities for employees of both Saudi Aramco and SABIC.

Related Parties Saudi Aramco and PIF are controlled by the Government of Saudi Arabia and are therefore deemed to be related parties.
Additional Information As the new majority shareholder of SABIC, Saudi Aramco has the ability to elect the majority of the SABIC Board, which will continue to comprise nine (9) directors.

Saudi Aramco expects the SABIC Board to focus on strategic alignment with the Saudi Aramco group and the creation of value for SABIC and all of its shareholders.

Attached Documents  

The Capital Market Authority and the Saudi Stock Exchange take no responsibility for the contents of this disclosure, make no representations as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this disclosure, and the issuer accepts full responsibility for the accuracy of the information contained in it and confirms, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts or information the omission of which would make the disclosure misleading, incomplete or inaccurate.

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