Hadeed, the Saudi Basic Industries Corp's Steel Unit, Will be Sold to PIF for $3.3 Billion

In a recent announcement, Saudi Basic Industries Corp (2010.SE) has revealed its decision to divest its subsidiary, Saudi Iron and Steel Company (Hadeed), to the Public Investment Fund (PIF) for an impressive enterprise value of 12.5 billion riyals ($3.33 billion). This was reported on Reuters by Rachna Uppal.

The deal, slated to conclude before the first quarter of 2024 draws to a close, holds strategic importance for SABIC as it intends to channel the sale proceeds toward bolstering its presence and expansion within the chemicals sector, as per an official statement provided by the company to the stock exchange.

Further details regarding the final sale price will be unveiled as the transaction approaches its completion date.

SABIC, a global petrochemical giant, has recently announced a significant decline in its second-quarter net profit due to reduced average sales prices and a softer demand environment. The company's decision to divest aligns with its strategy to concentrate on core operations.

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SABIC anticipates that the fair valuation of Hadeed's net assets will lead to a non-cash loss estimated to be in the range of 2 to 2.5 billion riyals in Q3 earnings.

In a significant development, Hadeed, a prominent steel product manufacturer, has played a pivotal role in supporting Saudi Arabia's ambitious infrastructure projects. These projects hold immense importance as they are integral to the kingdom's economic transformation plan, famously known as Vision 2030. It's worth noting that Vision 2030 is under the purview of the Public Investment Fund (PIF), Saudi Arabia's sovereign wealth fund, which is leading the charge.

In a separate announcement made on Sunday, the PIF disclosed its divestment of a 10.9% stake in the National Gas and Industrialization Company. This strategic move was executed through a private share sale, resulting in proceeds of 491.2 million riyals (equivalent to $130.96 million).

The shares were acquired by Jadwa Investment Company, marking a significant development in its portfolio management. The stake purchase was made on behalf of Jadwa Investment Company's managed investment funds and its esteemed clients, as indicated in an official statement released by the stock exchange. The transaction is slated for completion by September 5, signaling an impactful financial maneuver.

($1 = 3.7508 riyals)