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Sahara Petrochemical & Sipchem Sign MOU for Merger

Source: www.gulfoilandgas.com 12/4/2013, Location: Middle East

Sahara Petrochemical Co. announces the signing of a memorandum of understanding with Saudi International Petrochemical Company for begin confirmatory due diligence and continue the non-binding negotiations relating to the detailed terms of a proposed business merger between the two companies based on the principles of a merger of equals (the Proposed Merger ). as following:

- Related parties : Sahara Petrochemicals Company and Saudi International Petrochemical Company - The signing of the MoU comes as a result of the preliminary conclusions of the studies and negotiations in relation to the Proposed Merger which indicate that, subject to agreeing certain key terms, the Proposed Merger will be a positive transformational step in the business of the Company. The Proposed Merger is expected to enhance the Company s leading position in the local and international petrochemical industry and the combined business is expected to result in significant synergies related to operational efficiencies and the combined company would become a stronger platform for further growth in the long-term.

The MoU has been signed by Eng. Esam Fouad Himdy, CEO and Managing Director of the Company, on behalf of the Company, and Eng. Ahmad Al-Abdulaziz Al Ohali, CEO and Managing Director of Sipchem, on behalf of Sipchem, in the city of Riyadh.

In this regard, Eng. Himdy and Eng. Al-Ohali have jointly commented as follows: If completed, we hope that the Proposed Merger will benefit our shareholders and our employees. Indeed, the expectation is that the Proposed Merger will be positively transformational and potentially have significant benefits for both companies. The terms of the Proposed Merger will be underpinned by a shared commitment to achieve a fair result and create value for each company s shareholders based on the principles of a merger of equals. This is an important precedent in the petrochemical sector in the Kingdom of Saudi Arabia, which will, God-willing, result in a larger, more capable, and more competitive company that can increase investments in new projects in the Kingdom and globally, and will provide exciting growth opportunities for management and employees, adding value to the shareholders of both companies.

Both companies have agreed that, in the event the Proposed Merger occurs, it will be implemented by way of an exchange of shares where, after the Proposed Merger is completed, the Company will become a subsidiary of Sipchem. Under the terms of the Proposed Merger, Sipchem will issue 0.685 new shares for every one issued share in the Company. Accordingly, based on the agreed exchange ratio, if the Proposed Merger is completed, Sipchem will issue 300,574,575 new shares to the Company s shareholders in exchange for all issued shares in the Company.

The MoU does not constitute an offer by Sipchem to the Company s shareholders or to its board of directors, nor does it constitute an announcement of a firm intention to make an offer. Under the MoU, the Company and Sipchem have agreed to continue to co-operate with each other to complete the financial, technical, commercial, market and legal due diligence, agree an integration plan, and the governance and strategy of the combined group as well as the preparation of the definitive documentation required to implement the Proposed Merger. Should the companies agree to proceed with the Proposed Merger, they intend to enter into a definitive legally binding merger agreement that, amongst other things, will specify the terms of Sipchem s potential offer addressed to the Company s shareholders and its board of directors (the Merger Agreement ). Both companies will continue to conduct business as usual and both companies shares will continue to trade as usual until completion of the Proposed Merger.

Currently, both companies intend to finish their evaluation of the Proposed Merger with the intention of being in a position to sign the Merger Agreement in the first half of 2014.The MoU will expire on the earlier of the date on which the Merger Agreement is signed by the companies or by notice for termination of the studies from either company to the other.

The entry into the MoU does not mean that the Proposed Merger will be agreed between the two companies, that an offer will be eventually made in relation to the Proposed Merger, or that the terms or timing of any potential offer have been confirmed. If the terms of the Proposed Merger are agreed, it is expected that it will be subject to various conditions and approvals including, without limitation, the approval of the Capital Market Authority, the approval at the general assembly of each company, and the approval of the competent Saudi Arabian regulatory authorities.

In respect of the Proposed Merger, the Company has appointed Morgan Stanley Saudi Arabia as its financial advisor, Al-Jadaan & Partners Law Firm as its Saudi legal advisor, Clifford Chance LLP as its international legal advisor, and IHS Inc. as its technical and market consultant. Sipchem has appointed HSBC Saudi Arabia Limited as its financial advisor, Zeyad S. Khoshaim Law Firm as its Saudi legal advisor, Allen & Overy LLP as its international legal advisor, Jacobs Consulting as its technical consultant, and Nexant as its market consultant.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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