Published: Jun 08, 2014
Source: Tadawul

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Addendum Announcement from Sahara Petrochemical Co. related to the signing of a memorandum of understanding with Saudi International Petrochemical Co. regarding a proposed business merger between them

Further to the announcement made by the Sahara Petrochemical Company on 4 December 2013 regarding the entry into a memorandum of understanding with Saudi International Petrochemical Company (the MOU) to begin confirmatory due diligence and continue the non-binding negotiations relating to the detailed terms of a proposed business merger between the two companies based on the principles of a merger of equals (the Proposed Merger).

Both companies made positive progress in the confirmatory due diligence process, which indicated that the Proposed Merger shall achieve a positive milestone for both the companies from economic, marketing and technical perspectives; which in turn benefits both the companies shareholders and employees. 

Although both companies are still convinced that the Proposed Merger is in the interest of their shareholders, the companies reached a conclusion that it is difficult to implement this merger under the current regulatory framework using a structure acceptable to both companies where both companies will continue to exist whilst achieving operational integration. The Company and Sahara have therefore decided to postpone commercial negotiations related to the Proposed Merger and to postpone the entry into the Proposed Merger for the time being. As such, both companies will stop the exchange of information taking place as part of the commercial negotiations. Consequently, the companies, unlike what was announced earlier, will not sign a merger agreement during the first half of this year (2014). The companies, to the benefit of their shareholders, might agree on a structure different from the structure agreed upon in the MOU in the future, and they will inform the market in this regard of any developments that they are required to disclose under the law.

Finally, although the companies may revisit the possibility of reviving the commercial negotiations and the exchange of information in the future, at this stage they have agreed to pursue their business and strategic objectives independently of each other and without liaising with each other. This decision is not expected to impact the operations of the two companies.

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