Maaden to acquire SABIC's 20.6% stake in Alba

Saudi Arabian Mining Co. (Maaden) headquarters

Saudi Arabian Mining Company (Maaden) signed today, Sept. 17, a share purchase agreement (SPA) for the acquisition of the entire 20.62% shareholding of SABIC Industrial Investments Co., a wholly owned subsidiary of Saudi Basic Industries Corp. (SABIC), in Aluminium Bahrain B.S.C. (Alba).

Maaden will acquire 292.8 million ordinary shares in Alba. As a result, Maaden's holding in the company will be 20.62%, it said in a statement to Tadawul.

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Pursuant to the SPA, the consideration for the acquisition will consist of an amount paid in cash by Maaden to the Seller and will be within a range of BHD 363.08 million (equivalent to about SAR 3.623 billion) to BHD 398.2 million (or about SAR 3.974 billion). The agreed-upon amount will be determined in accordance with the mechanism specified in the SPA.

Maaden stated that the transaction supports its ambition to grow tenfold by 2040, with its aluminum business serving as a key contributor to this strategy. The acquisition of shares in highly experienced and well-established regional and global aluminum players further strengthens these growth objectives.

The SPA includes customary fundamental warranties given by each party and limited business and tax warranties given by the seller, Maaden stated.

It added that the completion of the acquisition will be subject to obtaining the relevant regulatory approvals and the satisfaction of certain conditions and corporate internal approvals, in accordance with the SPA.

The completion of the acquisition is also contingent upon obtaining approval from Maaden's ordinary general assembly, in line with Article 71 of the Companies Law, due to a conflict of interest involving a member of Maaden’s board of directors who also serves on the board of SABIC, the sole shareholder of the seller.

Maaden will fund the consideration fully in cash through its own resources, including available facilities.

Upon completion of the acquisition, Maaden will become the second largest shareholder in Alba with a 20.62% stake and will have two board seats in the board of directors of the company at closing, Maaden said, noting that the acquisition does not involve related parties.

Maaden has appointed Merrill Lynch Saudi Arabia as the financial advisor and AS&H Clifford Chance Law Firm as the legal advisor.

In a separate statement, SABIC indicated that the completion of the transaction will be subject to customary approvals from the relevant regulatory authorities and the

satisfaction of certain conditions precedent contained in the share sale and purchase agreement.

It added that the approval of the ordinary general assembly will be needed, given the conflict of interest with regard to Mohammed AlQahtani, pursuant to Article 71 of the Companies Law, being a common director of SABIC and Maaden.

SABIC also said the transaction is in line with its priorities of optimizing its portfolio and focusing on its core business to drive improved returns and reallocate capital towards higher margin opportunities and to be the preferred world leader in chemicals.

The proceeds will be used to reinforce SABIC’s growth in the chemicals industry. The exchange rate applied to the transaction value is SAR 1.00 = BHD 0.1002.

According to data available to Argaam, Maaden signed a non-binding agreement yesterday with Alba to subscribe to the latter's new shares. It will provide an in-kind contribution of the entire issued share capital of each of Maaden Aluminium Co. (MAC) and Maaden Bauxite and Alumina Co. (MBAC). This is in addition to the contractual rights with respect to the marketing and sale of products produced by MAC.

Yesterday's agreement is aimed at the potential merger of Maaden’s aluminum business with Alba. The new entity will be the nucleus for a global aluminum company through shared expertise, performance, as well as financial and production capabilities to compete globally.

Alba's shares rose strongly today by 20% on Bahrain Bourse , closing at BHD 1.272 apiece. Further, Maaden stock also climbed  by 7% to SAR 41.95 for today's session amid active trading.

SABIC stated that the book value of the asset (its stake in Alba) amounts to SAR 3.765 billion as on Aug. 31, 2024.