Two well-known plastics materials businesses may soon have new owners, according to a pair of reports.
The Reuters news service reported April 6 that Riyadh-based Saudi Basic Industries Corp. has selected financial firms HSBC and Morgan Stanley to work on an initial public offering of its specialty chemicals business. The potential IPO first was reported on late last year.
In an April 8 email to Plastics News, a Sabic spokesperson said the firm “does not comment on speculation or rumor.”
The potential IPO would include the GE Plastics business that Sabic acquired in 2006. Materials made by the unit include Lexan-brand polycarbonate and Noryl-brand polyphenylene oxide and polyphenylene ether.
In addition to resins and compounds, Sabic’s specialty chemicals unit makes composites, thermosets and additives. The unit has annual sales of $2 billion, according to the Reuters story.
Last year, Saudi energy firm Aramco bought a 70 percent stake in Sabic for $69.1 billion. The Reuters piece said that Saudi Arabia is encouraging more companies to list in a bid to deepen its capital markets under reforms aimed at reducing its reliance on oil.
Industry analyst Phil Karig agreed, saying in an email that Saudi Arabia “has had a long-term goal of diversifying away from its dependence on crude oil exports.”
“Some of the diversification has been through acquisitions of portions of GE and DSM that expanded the downstream footprint of Sabic in North America, Europe and elsewhere,” said Karig, managing director of Mathelin Bay Associates in St. Louis.
“Beyond reducing dependence on crude oil exports, Saudi Arabia also has a goal of increasing employment within the Kingdom itself, rather than mainly making investments in overseas production. Within this broader context, the Sabic IPO can be viewed as an indication that resources formerly invested in foreign acquisitions could be better invested closer to home.”
Sabic is a global petrochemicals firm that ranks as a major producer of polyethylene and polypropylene. The firm employs 33,000 and posted sales of $31.2 billion in 2020.