RIYADH: The Public Investment Fund on Sunday announced the signing of a share purchase agreement to acquire a 100 percent shareholding in the Saudi Iron & Steel Co., also known as Hadeed, from the Saudi Basic Industries Corp.
Based on a cross-conditional share exchange agreement, Hadeed will also acquire a 100 percent shareholding in AlRajhi Steel Industries Co, or Rajhi Steel, from Mohammed Abdulaziz AlRajhi & Sons Investment Co., or Rajhi Invest, in exchange for newly issued shares in Hadeed, the PIF statement said.
In a separate statement to Tadawul, SABIC revealed that the transaction is valued at SR12.5 billion ($3.33 billion).
PIF further said that this transaction aligns with the fund’s broader efforts to accelerate industrial development in the Kingdom and will also improve Saudi Arabia’s steel production capabilities.
“The steel industry is foundational to the Saudi economy and its diversification and growth. These transactions will bring together PIF’s financial capabilities and industry experience with Hadeed and Rajhi Steel’s leading technical and commercial expertise to create a national champion in Saudi Arabia’s steel sector,” said Yazeed A. Al-Humied, deputy governor and head of Middle East and North Africa investments at PIF.
He added: “They also build on PIF’s mandate to establish new strategic partnerships to enable the private sector.”
SABIC CEO Abdulrahman Al-Fageeh said that the transaction will help Hadeed become one of the most significant iron and steel companies in the Gulf Cooperation Council region.
“Over the years, Hadeed’s contribution to the construction sector, urban and civil development in the Kingdom of Saudi Arabia, as well as to the success and growth of SABIC, has been considerable,” said Al-Fageeh.
He added: “The sale of Hadeed will enable SABIC to focus meanwhile on its strategy to become the preferred world leader in chemicals.”
Hadeed is known for manufacturing steel products, including reinforcing bars, coiled wire and billets as well as slabs, sections, and hot and cold rolled coil.
For his part, Yazid Mohamed Al-Rajhi, board chairman of Rajhi Invest, said: “We’re excited to bring together our capacity and expertise, alongside that of PIF and Hadeed, to enable Hadeed to better meet the future demands of its customers.”
Source: Arab News