Saudi-based Bawan (1302) has inked a binding MoU with Petronash Global Ltd. to acquire UAE-based Petronash Holding Ltd for USD 175 million, marking its first entry into the oil and gas sector.
Agreement’s terms
– The valuation of Petronash Holding’s stakes is set at USD 175 million, conditional on achieving specific performance targets over three years.
– Bawan will pay an initial USD 80 million to acquire 80% of Petronash’s shares.
– Bawan will pay up to a maximum of USD 60 million, linked to Petronash’s financial performance over the next three years.
– Under a pre-agreed valuation and mechanism, the remaining 20% of Petronash’s shares will be bought after the audited financial statements for 2027 or 2028 are issued.
– The founder of Petronash will serve as its chairman for three years following the closure of the sale.
It’s worth mentioning that Petronash, which was founded in 2000 in the UAE, is a leading global company specializing in the production of chemical injection systems, and process equipment, and its flagship product is its modular well site packages.
The company operates primarily in Saudi Arabia, employing around 1,000 people. Petronash owns manufacturing facilities in Dammam, Dubai, Abu Dhabi, Doha, and Chennai, India, covering a total area of approximately 120,000 square meters.
Petronash focuses on supplying products to national oil and gas companies in the Gulf Cooperation Council (GCC) countries and also exports to regions in the Far East, Africa, and the Americas.
So what
Bawan sees this acquisition, which is still subject to regulatory approval, as part of its strategy to explore new investment opportunities in promising industrial sectors. This comes alongside the company’s selective acquisition and diversification strategy.
Founded in Riyadh in 1980, Bawan operates in several industries, including the metal, wood, electricity, and plastics production sectors. The company already has factories in Saudi Arabia, Kuwait, and the UAE.
Bawan’s net profit decreased to approximately SAR 23 million from April to June, marking an 8% YoY drop. Its net profits for the first half of 2024 fell to SAR 52.3 million, representing a 12% YoY decline.
The company plans to distribute SAR 36 million in cash dividends to shareholders at SAR 0.6 per share, with payments set to be made on October 10.
Now what
In an interview with “Al Arabiya Business,” Bawan CEO Mohammed Al Balawi mentioned that the acquisition aligns with the company’s strategy to diversify income sources, particularly amid Saudi Arabia’s focus on expanding gas production capacity.
Al-Balawi also noted that Bawan recently secured a financing agreement with a local bank for the full acquisition amount, to be repaid over seven years with a one-year grace period.
He added that Petronash is expected to contribute an average of SAR 1 billion annually in revenue to Bawan, with steady growth expected in future years.
