THIS SITE USES COOKIES

The cookie settings on this website are set to 'allow all cookies' to give you the very best experience. If you continue without changing these settings, you consent to this - but if you want, you can change your settings at any time at the bottom of this page.



(SAFCO) announces the signing of a share purchase agreement (SPA) with (SABIC) to acquire the (SABIC Agri-Nutrients Investment Company)

26/12/2019

Element ListExplanation
Action type

Acquisition of

Name of (the Acquired Company)/(Asset to be Purchased)SABIC Agri-Nutrients Investment Company (limited liability company)
IntroductionWith reference to SAFCO’s announcement on 26/02/1440 H (04/11/2018 G) in relation to signing a non-binding memorandum of understanding between Saudi Arabian Fertilizer Company (“SAFCO”) and Saudi Basic Industries Corporation (“SABIC”), Following that, SAFCO announces the signing of a share purchase agreement with SABIC (a related party), which owns 42.99% of the entire share capital of SAFCO on 28/04/1441 H (25/12/2019 G) (“SPA”), pursuant to which SAFCO will acquire 100% of SABIC Agri-Nutrients Investment Company’s share capital. The SABIC Agri-Nutrients Investment Company owns 50% of the issued share capital of both the National Chemical Fertilizers Company (“Ibn Al Baytar”) and Al Jubail Fertilizer Company (“Al Bayroni”) and 33.33% of the issued share capital of Gulf Petrochemical Industries Company (“GPIC”).

The parties agreed not to include at this stage SABIC’s share in both Ma’aden Phosphate Company and Ma’aden Wa’ad Al Shamal Phosphate Company, which were previously referenced in the non-binding memorandum of understanding.

This agreement comes as a result of the shared vision by SABIC and SAFCO, to enhance and improve efficiencies through consolidation and realization of synergies. It also envisages considerable opportunities for growth and development of competitive advantages in the global marketplace which serve SAFCO’s interests and enhances the rights of its shareholders.

Date of Signing the Agreement2019-12-25 Corresponding to 1441-04-28
Name of (the Acquired Company)/(Asset to be Purchased)SABIC Agri-Nutrients Investment Company (limited liability company)
Value of (The Company to be Acquired)/(The Asset to be Purchased)4,592,171,837.00 Saudi Riyals based on 3 months volume weighted average price as at the close of trading on 22/04/1441 H corresponding to 19/12/2019 G
Value of the listed company32,229,166,615.10 Saudi Riyals
Capital before Increase

4,166,666,660 Saudi Riyals

Number of Shares before Increase

416666666

Value of capital increase

593,687,380.00 Saudi Riyals

Capital Increase Percentage (%)

14.25 %

Capital After Increase

4,760,354,040 Saudi Riyals

Number of Shares After Increase

476035404

Share Exchange Equation (Ratio)

Not applicable

Potential Effects or Risks for Issuing such Shares on the Shareholders of the Current Company, the Company, and Decision Making thereon

Post completion of the acquisition, the existing shareholders (excluding SABIC) share capital ownership percentage will be diluted from 57.01% to 49.9 % which will lead to a decrease in their ownership percentage and their related voting rights.

Listed Company's Ownership Percentage in (Company to be Acquired)/(Asset to be Purchased) after the Issuance of Shares (%)

100 %

Ownership Percentage of Shareholders to Whom New Shares will be Issued after Conclusion of the Acquisition (%)

50.1 %

Additional Information or Substantial Conditions

For the purposes of valuing the shares to be acquired by SAFCO from SABIC in SABIC Agri-Nutrients Investment Company, the valuation methods used were discounted cash flow methodology and comparable company multiples. The total value of shares in SABIC Agri-Nutrients Investment Company will be 4,592,171,837 Saudi Riyals and the consideration will be paid for by issuing 59,368,738 ordinary new shares in SAFCO to SABIC valued at SAR 77.35 per share. The number of new shares to be issued by SAFCO has been calculated on the basis of the three-month volume weighted average price as at closing on 22/04/1441H (corresponding to 19/12/2019G).

SABIC’s ownership in SAFCO post this transaction will increase from 42.99% to 50.1%.

Related Parties

This transaction is deemed a related party transaction because the SPA has been entered into between SABIC and its related party subsidiary SAFCO. A number of SAFCO directors have an interest in the transaction and are conflicted due to their positions as SABIC’s representatives on SAFCO’s board. The conflicted board members are Mr Yousef Abdullah Al Benyan, Engineer Anas Yousef Kentab, Engineer Yousef Abdulrahman Al Zamil and Mr Abdulaziz Habdan Al Habdan in his capacity as the representative of the General Organisation for Social Insurance of Saudi Arabia (“GOSI”) as GOSI is a major shareholder in SAFCO.

The expiry date of the agreement

The SPA is conditional on obtaining the relevant authorities and extraordinary general assembly’s approval to increase the share capital to acquire the (SABIC Agri-Nutrients Investment Company).

Agreement Termination Terms

The SPA is conditional on obtaining the relevant authorities and extraordinary general assembly’s approval to increase the share capital to acquire the (SABIC Agri-Nutrients Investment Company).

Approvals 

SAFCO’s extraordinary general assembly approval and all other required relevant authority approvals (noting that the conflicted board members did not vote on that decision ).