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Saudi Arabia: Cristal deal glint in global M&A

As the deal between US-based Lyondell Chemical and Saudi Arabia’s National Titanium Dioxide (Cristal) closes so Saudi Arabian merger and acquisition activity looks set to increase further, and to cover more types of business, in 2007.

Cristal, which is 66% owned by Tasnee, announced on February 26 that it was to acquire Millennium Inorganic Chemicals TiO2 from Lyondell. The deal, worth $1.2 billion, is the biggest acquisition of a US company by a Saudi concern and is another example of the growing trend of emerging market companies buying rivals in the developed world. The Cristal deal includes a cash payment of $1.05 billion and estimated after-tax proceeds are $975 million. A mixture of equity and bank loan will raise the necessary funds.

Once the transaction has closed so Cristal’s global share of titanium dioxide production will increase to 15% from the previous 2% as it takes on facilities in Europe, Australia and in north and south America. The sale came after Lyondell completed a strategic business analysis that concluded that it should sell the inorganic branch of its chemical industry. "Several entities looked at the company and made bids. Once we had evaluated the bids we decided that Cristal’s was the best for us and so accepted it," says David Harpole, a spokesman for Lyondell. The deal will enable Lyondell to accelerate debt repayments and focus on capturing synergies between the refinery and chemicals business.

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