In a strategic move aimed at restructuring its investment portfolio and enhancing capital efficiency, Saudi Basic Industries Corporation (SABIC) announced the signing of an agreement to sell its entire engineering thermoplastics business in North America, South America, and Europe. The sale of these assets was agreed upon with Mutares SE & Co. KGaA, a specialized German investment firm, for a total value of approximately SAR 1.68 billion.
Deal details and financial structure
According to the official statement issued by SABIC on the Saudi Stock Exchange (Tadawul), this transaction is not merely a direct sale, but also includes a complex financial structure that safeguards the company's future rights. The financial consideration includes an upfront cash payment of SAR 210 million, in addition to a performance-based mechanism for future returns. This mechanism entails receiving 300% of operating cash flows for four years commencing two years after the transaction's completion, or a similar percentage of future net exit proceeds, with a guaranteed minimum return of SAR 262.5 million.
Strategic context and importance of the step
This move aligns with the global trend among major petrochemical companies to focus on high-yield assets and sustainable growth. SABIC, one of the world's largest petrochemical companies, is a pioneer in adopting strategies aimed at maximizing shareholder value. Economic analysts point out that major companies divesting from non-core or low-margin assets in certain markets allows them to redirect cash flow towards more profitable investments in emerging and high-growth markets, which is consistent with the company's vision to strengthen its global competitive position.
Expected financial and accounting impact
From an accounting perspective, SABIC has transparently explained the implications of this transaction. A non-cash loss of SAR 7.5 billion is expected to be recorded in the fourth quarter of 2025. This loss stems from the revaluation of assets at fair value compared to the net book value of the transferred assets, and these operations will be classified as "discontinued operations" according to International Financial Reporting Standard (IFRS 5). Financial experts confirm that while the non-cash loss impacts the financial statements, it does not affect the company's cash flow. On the contrary, it paves the way for improved profit margins and free cash flow in the long term following the completion of the divestment.
Timeline and regulatory approvals
The transaction is expected to take time to fulfill all preconditions, with SABIC anticipating the final closing of the deal in the third quarter of 2026. The process is subject to several key requirements, including obtaining the necessary regulatory approvals from competition authorities in the European Union and the Americas, as well as completing the procedures for separating the business technically and administratively from the SABIC Group, and completing consultations with employee representatives in the relevant regions, ensuring a smooth transfer of the business and production sites to the new owner.
