Both companies said no agreement has yet been reached on the final structure of a potential deal and that the talks do not necessarily mean that a deal will take place. However, the boards of directors of both companies gave the go ahead on Sep. 17 for negotiations to begin.

SIIG has a 50% stake in Petrochem, which controls 65% of Saudi Polymers and Gulf Polymers Distribution. Arabian Chevron Phillips, a wholly owned subsidiary of Chevron Phillips Chemicals, owns the rest of Saudi Polymers, which produces PE and PP at its site in Jubail. Saudi Polymers permanently closed its PS plant at the site in July.

A deal would mark another consolidation in the Saudi petrochemical landscape, following Saudi Aramco’s purchase in June of a 70% stake in SABIC for $69.1 billion and Saudi International Petrochemical’s (Sipchem) merger with Sahara Petrochemical in May 2019.

Petrochem and SIIG previously held merger discussions in 2011 but they suspended talks to allow the former’s production facility at Jubail to reach capacity and provide a better valuation of the companies, SIIG said at the time.

Author: Elaine Burridge, Freelance Journalist