Saudi Firms Start Talks to Form $11 Billion Chemicals Maker

(Bloomberg) — Saudi Industrial Investment Group and National Petrochemical Co. started talks to merge, potentially creating a firm with $11 billion in assets as Middle Eastern energy companies assess their options in a lower oil-price environment.

The talks are at an initial stage, and no agreement has been reached, the companies said Sunday. Saudi Industrial owns 50% of National Petrochemical.

National Petrochemical’s shares jumped as much as 9.6%, rising to the highest level since 2014, valuing the company at almost 15 billion riyals ($4 billion). Saudi Industrial was 4.9% higher at 10:29 a.m. in Riyadh.

Their possible merger comes as energy companies in countries such as Saudi Arabia, Qatar and the United Arab Emirates restructure their operations to cope with a market that’s under strain from lower demand amid the coronavirus pandemic.

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Merger talks push companies’ shares’ year-to-date gains higher

Recent examples of consolidation in the kingdom’s chemical industry include Saudi International Petrochemical Co.’s completion last year of a buyout of Sahara Petrochemical Co. That was followed by Saudi Aramco buying a majority stake in the largest Saudi chemical maker in a deal that was valued at about $70 billion.

(Updates share prices in third paragraph and in chart.)

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