Saudi firm Bawan Acquires Petronash Global for $175 Million

Saudi-based building materials manufacturer Bawan Company, has signed a binding Memorandum of Understanding (MoU) with Petronash Global Limited on September 6 to acquire the entire outstanding shares of the UAE firm Petronash Holding Limited for $175 million.

Petronash was established in 2000 in the UAE and is considered one of the leading global manufacturers of engineered packaged solutions for the oil and gas sector, according to a disclosure with Saudi Exchange Tadawul.

Petronash operates primarily in the Saudi market, with approximately 1,000 employees and a group of factories located in Dammam, Saudi Arabia, Dubai and Abu Dhabi, UAE, Doha, Qatar and Chennai, India, with a total manufacturing area of approximately 120,000 sq. m.

Its primarily supplies its products to national oil and gas companies in the GCC countries and exports its products to other countries in the Far East, Africa and the Americas.

The MOU will expire upon the signing of the sale and purchase agreement (SPA), which is expected to be signed on or before 30 September 2024, Bawan said.

As part of the transaction, the two companies have parties have agreed on the following key terms:

The entire shares of the Petronash are valued at $175 million subject to the company achieving set financial targets over the next three years.

Bawan will pay Petronash an initial amount of $80 million in exchange for 80% of the its shares, subject to the necessary conditions precedent and approvals being fulfilled under the SPA. Bawan will also pay Petronash a maximum of $60 million subject to the Company achieving set financial targets over the next three years.

Bawan will purchase the remaining 20% of the shares after issuance of the audited financial statements of the year 2027 or 2028 with an agreed valuation method and specified mechanism.

The Founder of Petronash U M Rao will be the chairman for three years from the date of closing under the SPA which will enable him to continue supporting the company in achieving its targeted growth in the coming years. Additionally, the senior executive management team of Petronash will continue to work for the Company and support its future operation and growth plans.

Petronash manufacturing plants are located in Dubai and Dammam and is equipped with advanced machinery, equipment and automated systems enabling us to completely manufacture, assemble and test our full range of products in-house.

Approvals          

The proposed transaction is subject to the approvals of the relevant official authorities, including the approval of the General Authority for Competition.

This acquisition reflects the commitment of the management of Bawan toward its strategy with regards to the ongoing exploration of new investment opportunities in all promising industrial sectors and to continue its selective acquisition transactions which diversify its investments and maximizes the return for its esteemed shareholders.