Saudi Basic Industries Corp (Sabic), recently announced that the firm is considering increasing its holdings in Clariant. According to reliable sources, Sabic wants to strengthen ties with the Swiss chemical industry behemoth.
Sabic ranks at the number four in the chemical industry and has bought 24.9% stakes in Clariant in 2018. Sources claim that Sabic would like to intensify its research and development program with Clariant and also hike its stakes in the Swiss specialty chemicals maker. Incidentally, Sabic already has a partnership with Clariant that licenses chemical process technology to customers including notable chemical industry players like Akzo Nobel and Huntsman. Sources close to the matter also claimed that a combination of businesses would precede any potential merger.
According to Swiss takeover rules, anyone with 33.3% shares can make an offer to take over the whole company. However, Sabic refused to be perceived as an aggressive acquirer and wants to obtain value out of its investment in Clariant graciously.
The anticipation of the takeover comes from the current trends of Middle Eastern firms eager to expand their reach in downstream chemicals operations. Many Saudi companies are trying to increase their presence outside the Kingdom as a part of the Vision 2030 plan that aims at diversifying the country’s economy beyond oil. Clariant produces catalysts that help to speed up processes at chemicals plants and buying Clariant will make a significant addition to Sabic’s portfolio, cite experts.
Sabic has stopped short of taking control of Clariant, a company with a market value of $7.8 billion. However, Sabic’s commitment towards Clariant is being viewed as a positive factor by Clariant’s CEO Hariolf Kottmann who reportedly told investors that a strategic update will be available by September 2018.
According to reliable sources, Sabic will express the strongest interest in strengthening ties with Clariant over plastics production as the former already has a plastics business which it purchased from GE in 2007 for $11.6 billion.