Up to 25 billion! Saudi Aramco may acquire 20% of Reliance Industries

Bloomberg reported that Saudi Aramco is discussing the purchase of approximately 20% of Reliance Industries with company shares valued at approximately US$20 billion to US$25 billion. The details of the transaction are still under negotiation. The two parties may reach an agreement within the next few weeks at the earliest, but the possibility of a breakdown in the negotiation cannot be ruled out at this time. The report quoted people familiar with the matter as saying that an agreement may be reached as soon as possible in the next few weeks. After the news came out, Reliance's shares expanded their gains on the Bombay Stock Exchange to a maximum of 2.6%.

It is reported that this is the first all-share transaction of Saudi Aramco since its listing in 2019. Based on the estimated market value of Saudi Aramco of US$1.9 trillion, Reliance Industries Group will acquire approximately 1% of the world’s largest energy company.

Reliance Industries announced that it will sell 20% of its petrochemical business to Saudi Aramco in 2019 for US$15 billion.

In August 2020, Saudi Aramco had stated that although the decline in oil prices forced it to cut investment expenditures, it was still striving to acquire Reliance Industries Ltd.'s refining and chemical business shares at a price of 15 billion US dollars. However, last year, oil prices and demand were affected. After the pandemic collapsed, the transaction stalled.

In late June, Reliance Group Chairman Mukesh Ambani stated that he hopes to formally establish a partnership with Saudi Aramco this year, and its chairman Yasir Al-Rumayyan will join the Indian conglomerate’s board of directors as an independent director.

It is reported that the transaction will help Aramco achieve its goal of more than doubling its refining capacity to 8-10 million barrels per day. Saudi Aramco is working to start the Jazan refinery with a daily output of 400,000 barrels on the Red Sea coast in southern Saudi Arabia. At the same time, it also owns the largest oil refinery in the United States and factories in South Korea and Japan. It is currently planning to establish joint ventures with Chinese companies.