Saudi Arabian petrochemical giant SABIC (Saudi Arabian Basic Industries Corporation) has concluded the transfer of its Hadeed steel subsidiary to the Public Investment Fund (PIF), the kingdom's sovereign wealth fund. The deal, which sees PIF assume full ownership of Hadeed, carries a price tag of $3. 3 billion. This move signifies a strategic shift for SABIC as it concentrates on its core chemical business.
The acquisition, first announced in September 2023, underwent the necessary regulatory approvals before reaching completion. SABIC fulfilled all the stipulated conditions, finalizing the transfer of Hadeed on May 27, 2024. The official announcement was made through a statement to the Saudi stock exchange.
The final sale price might see some adjustments based on a mechanism outlined in the agreement. This mechanism, known as the completion account, is expected to be finalized in the latter half of 2024.
The sale of Hadeed aligns with SABIC's strategy to streamline its operations and focus on its core competencies within the chemicals sector. SABIC is a major player in the global chemicals industry, producing a vast array of chemicals, including fertilizers, plastics, and industrial materials. By divesting Hadeed, the company aims to sharpen its strategic focus and enhance its performance in the chemicals domain.
For PIF, the acquisition of Hadeed presents an opportunity to expand its portfolio and contribute to the diversification of the Saudi Arabian economy. PIF, established in 1971, functions as a key investment arm for the Saudi government. The fund manages a substantial portfolio encompassing various sectors, and the addition of Hadeed strengthens its presence in the crucial steel industry.
The acquisition of Hadeed by PIF is anticipated to have a positive impact on the Saudi steel sector. PIF's resources and investment capabilities could potentially fuel the growth and modernization of Hadeed's operations. This, in turn, could bolster the kingdom's steel industry, contributing to its overall economic development.
The transfer of Hadeed from SABIC to PIF marks a significant development in the Saudi Arabian industrial landscape. The deal reflects SABIC's strategic focus on its core chemical business and PIF's commitment to diversifying the Saudi economy. The future implications for Hadeed and the wider Saudi steel industry remain to be seen, but the acquisition holds promise for growth and development.