SABIC to sell Americas, Europe units; expects SAR 18.3B non-cash loss

In an effort to optimize its portfolio, Saudi Basic Industries Corp. (SABIC) said it is divesting 100% of the shares in SABIC Europe B.V., comprising its European petrochemicals business and assets, to AEQUITA—an established operator in European industrial sector.

SABIC’s ownership in SABIC Europe includes prominent production facilities located in Teesside (UK), Geleen (the Netherlands), Gelsenkirchen (Germany), and Genk (Belgium), the Saudi-listed firm said in a statement to Tadawul.

The petchem major will also give up all associated commercial activities and infrastructure to AEQUITA’s unit, AEQH38 GmBH, (Munich, Germany).

The enterprise value is SAR 1.87 billion, the statement noted.

The consideration will be settled entirely via two perpetual vendor notes repayable based on future cashflows, resulting from synergies between the divested SABIC business and other European olefins and polyolefins assets of AEQUITA.

The anticipated deal closing is Q4 2026, subject to conditions that include separation of SABIC Europe from SABIC and regulatory approvals.

The deal also requires consultations process with applicable employee representatives body, waiver of change of control termination rights in certain material contracts with SABIC’s majority shareholder group and completion of certain agreed capex projects.

SABIC’s European petrochemicals business operates world-scale facilities engaged in the production and marketing of ethylene, propylene, low- and high-density polyethylene (LDPE, HDPE), polypropylene (PP), and value-added polymer compounds.

The business supplies diverse industrial and consumer end markets across Europe.

The asset’s book value stands at SAR 12.49 billion (as of Sep. 30, 2025, standalone in the defined perimeter), the statement added.

SABIC expects the fair valuation of SABIC Europe to result in a non-cash loss of SAR 10.8 billion, to be recorded in SABIC’s Q4 2025, based on the net assets to be transferred. This preliminary estimate will be subject to further substantiation for SABIC’s consolidated financial statements for the full year 2025.

The transaction reasons include strategic portfolio optimization and capital recycling towards growth markets and businesses, improving SABIC’s return on capital by divesting low-return operations and enhancing profit margins and free cash flow.

SABIC will deconsolidate all European petrochemicals assets/operations from its group financials at the time of closing the transaction and SABIC Europe will be treated as discontinued operations in accordance with IFRS 5 in SABIC’s consolidated financials for 2025.

Future proceeds and returns from the transaction will support SABIC’s growth strategy and ultimate value creation for SABIC’s shareholders, the company indicated.

In a separate statement, SABIC also announced the divestment of 100% of its Engineering Thermoplastics (ETP) business in the Americas and Europe to Mutares SE & Co KGaA.

SABIC will divest interest in ETP operations, including major production sites and related activities to Mutares—a publicly-listed operational investor headquartered in Munich, Germany.

The agreed enterprise value for the transaction is SAR 1.68 billion, which includes an upfront cash amount of SAR 210 million. This is in addition to an earn out of 30% of operating cash flows for four years starting from the second anniversary of closing and 30% of net exit proceeds (in case of exit). With a minimum earnout guaranteed of SAR 262.5 million payable at the earlier of four years after the second anniversary or exit.

The assets’ book value stands at SAR 16.66 billion (as of Sept. 30, 2025, standalone in the defined perimeter).

The fair valuation of ETP business in the Americas and Europe is expected to result in a non-cash loss of SAR 7.5 billion in SABIC’s Q4 2025 financials, based on the net assets to be transferred. This preliminary estimate will be subject to substantiation for SABIC’s consolidated financial statements for the full year 2025, the statement noted.

SABIC further anticipated the deal closing to be during Q3 2026 (subject to conditions precedent satisfaction).

The Saudi-listed petrochemical giant additionally clarified the deal terms comprising, completion of separation of SABIC’s ETP operations in the Americas and Europe from the SABIC Group, regulatory approvals in Europe and the Americas and completion of consultations process with applicable employee representatives’ body.

SABIC will deconsolidate all ETP business in the Americas and Europe from its group financials at the time of closing the transaction and will be treated as discontinued operations in accordance with IFRS 5 in SABIC’s consolidated financial statements at year end 2025.

Proceeds and future returns from the transaction will support SABIC’s growth strategy and ultimate value creation for SABIC’s shareholders, SABIC indicated.

*As per net assets to be transferred.

*Metric ton/year.