Sabic to sell European business to Aequita: Update

Adds detail on Sabic write down in para 2

Saudi state-controlled Sabic will sell its European petrochemicals and polymers assets to Germany-based private equity company Aequita for $500mn, it said today.

The transaction will be fully funded by loans from Sabic that are repayable "based on future cashflows, resulting from synergies between the divested Sabic business and other European olefins and polyolefins assets". The companies anticipate the deal closing in the fourth quarter. Sabic said that it would record a SAR10.8bn ($2.88bn) non-cash write down as a result of the divestment

The acquisition includes Sabic's production facilities in Teesside, UK, Geleen, the Netherlands, Gelsenkirchen, Germany, and Genk, Belgium. This includes an operating cracker in Geleen, Sabic having closed another cracker there, and a cracker in Teesside.

Sabic said the sale allows it to "exit structurally competitive disadvantaged assets" and help it to "refocus financial resources and management attention towards growth areas where [it] has clear competitive advantages". Sabic said it would export products to Europe and the Americas from the Middle East, although the sale agreement includes all related commercial functions.

Aequita is in the process of building a scaled olefins and polyolefins business. It is already acquiring olefin and polyolefin assets from LyondellBasell. It could have options to extend, with various assets up for sale including BP's integrated refinery and cracker complex in Gelsenkirchen, which is a key supplier to Sabic's polymer production at the same site.

Sabic also said today that it will sell its engineering thermoplastics division in the Americas and Europe to Mutares, another German private equity company.