* The petroleum & natural gas company is considering issuing bonds in order to finance the company’s acquisition of SABIC.
* The deal would involve the acquisition of nearly all or all of the 70% stake in SABIC.
Saudi Aramco, the Saudi Arabian national petroleum & natural gas company, has reportedly announced that it intends to issue bonds in the second half of 2019 to help the company finance its planned acquisition of SABIC.
Reports cite, the deal would involve the acquisition of nearly or all of the 70% controlling stake in the Saudi petrochemical manufacturing company currently held by the nation’s sovereign wealth fund, Public Investment Fund of Saudi Arabia. According to a report by Reuters, though the financial details related to the acquisition have not been unveiled yet, the deal could be valued at approximately $70 billion. The Saudi Arabian petroleum & gas company is working along with Morgan Stanley & JP Morgan on the acquisition of the petrochemical company.
The two banks were working on a planned stock-market listing of Saudi Aramco along with others before the plan to list the firm & offer a 5% stake to other investors was cancelled last year.
Sources with knowledge of the matter claim that the state-owned oil giant is expected to be listed on the market by 2021. The Saudi Aramco valuation would be based upon the market; however, petroleum reserves would also be one of the factors that would help establish the company’s value.
Energy Minister of Saudi Arabia, Khalid al-Falih stated that the issue of the bonds intends to give the company several sources of capital. Falih further stated that without or with the SABIC acquisition, a company of the size of Aramco needs access to the capital market as its capital spend & capital program is going to be $40 to $50 billion annually.
According to reports, further details regarding the scheduled deadline of acquisition of SABIC has not been unveiled yet.