Saudi energy giant Aramco will acquire an additional 22.5 percent stake in Rabigh Refining and Petrochemical Co. (Petro Rabigh) from Tokyo-based Sumitomo Chemical for $702 million. Currently, Aramco and Sumitomo Chemical each own 37.5% of shares in the Tadawul-listed refiner Petro Rabigh.
Aramco Becomes Majority Shareholder
Once the deal closes, at a price of 7 Saudi riyals ($1.86) per share, Aramco will emerge as Petro Rabigh’s majority shareholder, controlling roughly 60% of the company. Meanwhile, Sumitomo Chemical’s ownership will decrease to a 15% stake.
Financial Measures to Strengthen Petro Rabigh
The deal is part of a package of financial measures that will reinforce Petro Rabigh’s financial position, Aramco said on Wednesday. The proceeds received by Sumitomo Chemical from the sale will be injected into Petro Rabigh through an agreed-upon mechanism.
Additional Funding and Liability Reduction
Furthermore, the Saudi energy firm will contribute an additional $702 million to Petro Rabigh, mirroring Sumitomo Chemical’s investment. This combined injection of $1.4 billion will bolster the company’s financial health.
In addition, both Aramco and Sumitomo Chemical have agreed to gradually forgive $750 million each in shareholder loans, collectively reducing Petro Rabigh’s debt by $1.5 billion. These financial measures intend to strengthen Petro Rabigh’s balance sheet and cash position as part of a broader plan to modernize the refinery.
Strategic Goals and Future Integration
Hussain A. Al Qahtani, Aramco Senior Vice President of Fuels, stated: “Aramco continues to identify opportunities to strengthen its downstream value chain, secure placement of its upstream crude oil with affiliated refineries, and convert more of its hydrocarbons into high-value materials.”
By increasing their shareholding, the company aims to achieve closer integration with Petro Rabigh and facilitate its turnaround strategy.
The transaction is subject to customary closing conditions, including regulatory and other third-party approvals.
