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Saudi Bahri, Aramco Inks MOU To Merge Fleets In Proposed $1.3B Deal
Wednesday, Jun 27, 2012
By Iman Dawoud
LONDON--The National Shipping Company of Saudi Arabia, Bahri, said Wednesday it has signed a non-binding memorandum of understanding with state-owned Saudi Arabian Oil Co., or Saudi Aramco , to merge their fleets and operations.
Bahri will merge its operations with Vela International Marine Ltd., a wholly owned subsidiary of Saudi Aramco , in a deal that valued at approximately 4.9 billion Saudi riyals ($1.3 billion), it said in a statement posted on the Saudi bourse website.
The proposed merger would create a large and more diversified national shipping company, and the combined fleet would make Bahri the fourth-largest owner of very large crude carrier's, or VLCCs, globally, while Bahri would be the exclusive provider of VLCC crude oil shipping services to Saudi Aramco under a long-term agreement.
The transaction would be composed of a cash payment of SAR4,875,000,000 ($832.75 million) in addition to 78,750,000 new Bahri shares to be issued to Vela at an agreed price of SAR22.25 per share, which equates to 20% of Bahri's total shares. Bahri said it will raise the cash component through debt financing.
Bahri Chairman Mr. Abdullah Al-Rubaian and Saudi Aramco Senior Vice President Khalid G. Al-Buainain, who also serves as Chairman of Vela , signed the memorandum of understanding today in Dhahran. Both parties say they intend to sign the transaction documentation in the fourth quarter of 2012 and to complete the transaction during the course of 2013.
Under the proposed merger Saudi Aramco will continue to manage all crude oil marketing and sales directly with its customers, and Bahri will provide transportation services to Saudi Aramco on commercial terms.
"Our long-term strategy is to create a global maritime leader with the commercial and financial strength to provide safe and reliable shipping services that meet Saudi Aramco 's long-term strategic needs," Vela Chairman Khalid G. Al-Buainain said.
Bahri shares last traded Tuesday +7.88 at SAR17.80.
Write to Iman Dawoud at iman.dawoud@dowjones.com: Twitter: @ZDJnews
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27-06-12 1647GMT
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