Sabic offloads struggling subsidiaries in Europe and the Americas

• Focusing on high-growth markets
• Market value halved over 3 years
• German companies to buy divested assets

Saudi Basic Industries Corp (Sabic) has agreed deals to sell two of its struggling foreign subsidiaries as the loss-making petrochemicals company seeks to streamline its business and re-focus on higher-margin operations elsewhere.

Once the darling of Saudi Arabia’s stock market, Sabic’s shares slid to a 17-year low on Wednesday and were down a further 1 percent by early afternoon Riyadh time on Thursday.

The company’s market value has fallen by nearly half over the past three years.

This slump reflects a wider malaise in the global petrochemicals sector where a worsening supply-demand imbalance and increasing raw materials costs have shrunk industry margins to multi-decade lows.

Petrochemicals are mostly made from oil and gas. As such, Saudi Arabia is among the lowest-cost petrochemicals producers worldwide thanks to its abundant hydrocarbon reserves, while Europe and Asia, excluding China, are the most expensive.

These industry dynamics have spurred Sabic to agree separate deals to offload its European petrochemicals unit and its engineering thermoplastics business in Europe and the Americas for a combined enterprise value of $950 million.

The Saudi company will however receive little money immediately upon completion of the sales. Enterprise value includes a company’s debts and cash and cash equivalents on its balance sheet.

Both its thermoplastics and petrochemicals businesses have negative cash flows, meaning more money is leaving than coming in, and have been operating at a loss from 2023 as revenue dwindled and costs remained little changed.

Sabic’s operating performance “is likely to improve significantly with the sale of the bleeding European operations,” Bahrain’s Sico Bank wrote in a client note. “These deals could serve to re-rate the stock.”

Sabic said the sales would boost its return on capital employed, a financial metric measuring a company’s profitability relative to debt and equity, by offloading lower-margin businesses.

The deals will also enable the company to “exit structurally competitive disadvantaged assets”, “refocus capital and resources on growth markets” and improve cashflow, the company said.

Germany’s Mutares SE & Co will pay Sabic SAR210 million ($56 million) in cash up front for Sabic’s thermoplastics business, plus a minimum SAR263 million a few years later. The deal will probably be completed in the third quarter of 2026, Sabic said.

The unit makes thermoplastics mostly for the automotive, construction, electronics and healthcare sectors. It has three production facilities in the US and one in each of Canada, Mexico, Brazil, Spain and the Netherlands.

The thermoplastics unit reported earnings before interest tax, depreciation and amortisation (Ebitda) of minus SAR802 million in the first nine months of 2025 while its debts amounted to SAR14.1 billion as of September 30.

Further reading:

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• Aramco-owned Sabic turns $400m profit in 2024
• Sabic tells Tadawul it plans to list industrial gas unit

Separately, Sabic has also agreed to sell its ailing European petrochemical manufacturing operations to Munich’s Aequita for an enterprise value of SAR1.9 billion ($500 million), according to the statement. These span its production facilities in Britain, the Netherlands, Germany and Belgium.

The deal will be settled through two perpetual vendor notes based on the future cashflows of the divested assets, so Sabic will not receive any cash upon completion of the transaction which is expected in late 2026.

Sabic made a net loss of SAR3.7 billion in the first nine months of 2025 as revenue fell, costs and taxes rose and it took a SAR3.5 billion impairment against its British operations. That compares with a net profit of SAR5.2 billion in the prior-year period.