Saudi Basic Industries Corp., the Middle East’s largest chemical maker, is pulling back from Europe and the Americas, agreeing to sell businesses in those regions for a combined enterprise value of about $950 million as a prolonged industry downturn erodes profits and margins.
Sabic will divest 100% of Sabic Europe to Germany’s Aequita SE & Co. for an enterprise value of 1.88 billion riyals ($500 million). In a separate transaction, it agreed to sell its engineering thermoplastics business across Europe and the Americas to Mutares SE & Co. for 1.69 billion riyals ($450 million), the company said.
The exits will come at a significant accounting cost. Sabic expects a non-cash loss of 10.8 billion riyals from the Sabic Europe sale and a further 7.5 billion riyals from the engineering thermoplastics divestment, both set to hit 2025 fourth-quarter earnings.
Chemical producers worldwide have been under pressure as softer demand, falling selling prices and weaker utilization rates squeeze margins, prompting asset sales and project shutdowns across the sector. Sabic, which is majority owned by Saudi Aramco, reported a weaker-than-expected third-quarter profit as the downturn dragged on.
The disposals represent “a significant step” in Sabic’s strategy to focus on higher-growth markets, streamline costs and boost returns on capital while strengthening future cash flows, the company said.
Sabic plans to close the transaction with Mutares in the third quarter and the Aequita deal in the fourth quarter, at which point the assets will be deconsolidated from its financial statements.
Sabic shares plunged to a 16-year low in Riyadh trading after the announcement.
📌 Why it matters:
Sabic’s retreat highlights how the global chemical downturn is forcing large producers to reshuffle portfolios and absorb sizable losses to reposition for the next cycle.
📌 Bottom line:
The Saudi chemical giant is sacrificing short-term earnings to sharpen its focus, betting that a leaner, growth-oriented portfolio will deliver stronger returns once market conditions improve.
- Click here for statement on Aequita deal
- Click here for statement on Mutares deal
