Potential merger with Sipchem may be finalized by year-end: Sahara’s CEO

Sahara Petrochemical Co.’s planned merger with Saudi International Petrochemical Co. (Sipchem) is likely to be complete by year-end, backed by the strong results of both companies, Sahara CEO Saleh Bahamdan told Argaam on Wednesday.

The merger process is proceeding as scheduled. All requirements of the Capital Market Authority and other regulatory entities are likely to be fulfilled.  

“We’re optimistic that the merger will create a new entity with strong prospects going forward,” Bahamdan said.

The two companies signed a non-binding memorandum of understanding to start talks for a potential merger in December 2013. However, the negotiations were called off in June 2014, citing “inadequate regulatory framework”, Argaam earlier reported.

In March 2018, Sipchem said it would resume discussions with Sahara following the recent changes in merger and acquisition (M&A) regulatory framework.

Meanwhile, Bahamdan attributed Sahara’s solid performance in Q2 2018, to improved operations at its affiliates, along with higher sales volumes and product prices. 

Al-Waha Petrochemical Co. aims to boost production to 510,000 tons this year. The 75 percent-owned subsidiary focused on producing the "HECO" grade of polypropylene, which accounted for 80 percent of total capacity, and generated higher revenue.

Sahara’s affiliates reported positive results following the maintenance processes implemented last year.

“We started to generate profit from our joint venture with Ma'aden, SAMAPCO, after incurring losses last year. Production is improving amid higher product prices, which led to higher profitability and re-evaluation of some assets in the project, he added.

Sahara’s performance was also bolstered by Saudi Acrylic Monomer Company Limited (SAMCO) and Saudi Butanol Company (SABUCO).

Meanwhile, investors are working on solutions to counter weak demand and low prices of the polymers produced by Saudi Acrylic Polymer Company (SAPCO).

Sahara’s second-quarter net profit more than doubled year-on-year to SAR 221 million.