Aramco's SABIC acquisition approved by EU regulators

Dubai — Saudi Aramco, the world's largest exporter of crude oil, received approval from the European Commission to acquire 70% of Saudi Basic Industries Corp., for $69 billion, the Saudi stock exchange Tadawul said Sunday.

The shares bought from Saudi Arabia's Public Investment Fund will provide cash to the PIF and help Aramco to expand its downstream operations. "We're no longer the oil and gas sector," Saudi energy minister Abdulaziz bin Salman told an Aramco meeting in Dharhan last week. Power, chemicals, petrochemicals, crude oil, refining are all considered the energy sector, "and this is why Aramco will be owner of the government shares in SABIC soon."

The deal has now received all necessary clearance, in accordance with antitrust rules, and can be finalized, according to the Tadawul announcement.

Petrochemicals accounts for the bulk of SABIC's business. It also produces metals and agri-nutrients and has facilities in the Americas, Europe, Asia and Africa.

The company has said it is looking to grow via investments in the US and China. It recently marked ground-breaking for its petrochemicals joint venture project with ExxonMobil in the US Gulf Coast. The company expects to tap into China's demand by enlarging its existing joint venture with Sinopec in the Tianjin province.

Saudi Aramco confirmed its status as the world's largest company in December, when it listed 1.5% of its shares on the Tadawul stock exchange, with a valuation of $1.7 trillion. The SABIC acquisition will see Aramco entering new markets, while also diversifying from a predominantly upstream company to a more integrated entity, as well as potentially boost profits by increasing production of value-added downstream products.