SABIC to sell European and Americas petrochemicals assets, shifting focus to exports

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SAUDI state-controlled petrochemical company SABIC has agreed to sell its manufacturing assets in Europe and the Americas for nearly US$1bn, reflecting an industry slowdown in the regions. Job losses have not been ruled out.

The disposals include the US$500m sale of SABIC’s European petrochemicals business to AEQUITA, and a US$450m sale of its engineering thermoplastics businesses in Europe and the Americas to Mutares. SABIC said it will continue to export to both Europe and the Americas, describing the regions as “priority markets”.

Mutares chief investment officer Johannes Laumann said the takeover could result in job losses but told TCE that “any potentially necessary reduction in staff will be carried out in a socially responsible manner”. He added that the majority of SABIC’s engineering thermoplastics employees are based in North and South America.

SABIC currently produces olefins and polyolefins in the UK, Belgium, the Netherlands and Germany, but a combination of high energy prices and cheap imports from Asia have threatened European petrochemical manufacturing over recent years. A report by the Oxford Economics think tank commissioned by INEOS last year warned that around 40% of EU ethylene production capacity is under threat.

The company is expected to refocus its petrochemical production in the Middle East, where the industry is expected to recover by 2030, according to Wood Mackenzie, driven in part by the expansion of lower-cost natural gas crackers compared with naphtha-based plants.

SABIC chairman Khalid H Al-Dabbagh said the disposals were intended to “maximise shareholder value by enhancing the company’s cash generation capacity”. The company also expects the sales to improve profit margins.

Both AEQUITA and Mutares are German private equity firms specialising in business carve-outs and underperforming assets, and have said continuity will be a priority following the acquisitions. For Mutares, the deal is its largest to date and marks the launch of a new chemicals and materials portfolio.

According to Mutares, SABIC’s engineering thermoplastics division is the world’s second-largest producer of PC and the sole producer of PBT in the US. The company sells products to the automotive, construction, consumer goods, electronics and healthcare sectors.

AEQUITA did not respond to a request for comment on whether the acquisition could result in job losses.