SABIC inks governance, cooperation agreements with Clariant

Saudi Basic Industries Corporation (SABIC) signed on Monday a governance agreement with Clariant AG to define its position as a major shareholder and confirm Clariant AG’s independence as a public company under Swiss corporate laws, the firm said in a statement to Tadawul.

Under the agreement, Clariant AG’s board of directors will be increased to 12 members, of which four members will be nominated by SABIC, pending the approval of an extraordinary general assembly that will be held in October.

SABIC is also entitled to nominate Clariant AG’s chief executive officer.

In January, SABIC said it acquired a 24.99 percent stake in Clariant AG, a leading international specialty chemicals producer.

In a separate statement, SABIC said it signed memorandum of understanding (MoU) with Clariant AG, to establish a new business for the production of High Performance Materials.

Under the nine-month MoU, which will expire in June 2019, SABIC’s specialties business would be merged with Clariant additives and high value masterbatch offerings, as part of the Clariant group.

The specialties business comprises SABIC’s unique ULTEM and NORYL resins, and its families of LNP compounds and copolymers.

The transaction is expected to be signed in 2019, to be implemented early 2020.

SABIC will then form a new joint venture incorporating both firms’ products in order to achieve a unique competitive advantage and realize cost synergies and operating efficiencies, the statement said.

The deal will be subject to shareholders’ and regulatory agreements.

The move is part of SABIC’s growth strategy.

SABIC has no plans for a full takeover of Clariant AG, the statement added.