April 6, 2002	Saturday	Muharram 22, 1423

RIYADH, April 5: The Saudi Basic Industries Corporation (SABIC) has announced ‘agreeing in principle’ to buy the petrochemcial unit of the Dutch chemical giant DSM NV at a price of 2.25 billion euros ($2 billion) in cash.

In a joint statement issued to the press it said that the agreement will make the Middle East’s largest petrochemical producer SABIC, the No.3 polyethylene producer and No.4 polypropylene producer in the world.

SABIC currently employs 14,500 people worldwide. In 2001 SABIC posted sales of approximately SR29 billion (8.9 billion euros) and a net profit of approximately SR1.8 billion (550 million euros) despite adverse and recessionary market conditions.

The acquisition will move SABIC from 22nd position to 11th position in the global petrochemical industry. Market sources say SABIC is also in the final stages of acquiring the petrochemical arm of the Italian ENI.

Analysts here say the current acquisition of SABIC and its projected takeover of ENI’s petrochemical business will provide SABIC with a strong entry position in the European market and a springboard for SABIC’s ambition to become a sector leader worldwide. The intended acquisition brings together experienced management teams, successful R&D divisions and a group of skilled people unrivalled in the industry.

In 2001 DSM Petrochemicals generated sales of 2.4 billion euros. It annually sells about 2.6 million tons of polymers, mainly in Europe. The proposed sale includes DSM Hydrocarbons BV; DSM Polyethylenes BV; DSM Polyporpylenes BV (all in the Netherlands); DSM Polyolefine GmbH (DPO, Germany); DSM Hydrocarbon Americas Inc and DSM Polypropylene North America Inc. in the US.

The proposed sales further includes all related technology positions and the activities of the stamicarbon licensing department for DPC and dedicated activities of DSM’s support department, such as the petrochemical related activities of DSM Research and DSM dedicated sales activities of DPC in Belgium, Denmark, France, Spain, Italy, Germany, the UK and Turkey, as well as DSM Sales International and the shared services.

In total about 2,300 DSM employees will be transferred to SABIC. DSM was supported in the transaction process by Credit Suisse First Boston, while SABIC was advised by JP Morgan Chase.