Sabic seen eyeing DSM’s petrochemicals operations

Amsterdam, Jan 4: Saudi Arabian conglomerate Saudi Basic Industries Corp (Sabic) may be interested in buying DSM NV’s petrochemical operations, according to media reports, but the Dutch chemicals group on Friday declined to comment. The fresh speculation helped push DSM shares more than two per cent higher, significantly more than European rivals.

Media in the Dutch province of Limburg, where DSM is based, reported that representatives of Saudi government-controlled Sabic had visited DSM factories twice.

DSM has previously said it wants to divest its petrochemicals unit, which has an annual turnover of about three billion euros ($2.71 billion). That move is part of the group’s strategy to focus on higher-margin specialty chemicals, where it aims to double annual sales to 10 billion euros by 2005.

“We don’t comment on any rumours, not even whether any party has visited our site or not,” DSM spokesman Arthur Spierts said.

“At this stage of the process, it’s very usual that possibly interested parties are visiting our location ... We have visits from outside people on a regular basis,” he told Reuters.

Sabic was not immediately available for comment, but the firm’s managing director Mohamed al-Mady told a US trade magazine in November that the two companies had held talks.

Sabic would not be alone in considering acquiring the activities.
Reports surfaced in October that oil giant Exxon Mobil had begun a due diligence review into buying DSM petrochemical activities but neither company has confirmed the move.

Company watchers have speculated that Copenhagen-based Borealis could also be a possible buyer for DSM’s operations, although a spokesman for Borealis denied the company was interested in taking over more assets in Europe.

“We are continuously looking for expansion for growth, mainly in Asia and the Middle East. We will build on our existing platforms and portfolios in Europe,” a Borealis spokesman said.

By 1030 GMT, DSM shares were outperforming the Dow Jones Stoxx Chemicals index by rising 2.7 per cent to 43.28 euros — their highest since June 2001.

Earlier this week, Sabic was reported to be close to buying the petrochemicals business of Italian energy group Eni. Analysts said while talk of a potential link-up between DSM and Sabic had been circulating in the market for months, the most recent speculation of Sabic representatives visiting plants showed the process was moving forward. “If you want to acquire a plant, I think that’s what you have to do ... It’s not a pair of shoes you buy over the Internet,” said Jan Dick van der Nol, analyst with Fortis.

— Reuters