SIBUR and TAIF unite petrochemical businesses
The deal will bring a large-scale synergy effect
On April 23, a significant event occurred in the petrochemical industry of Russia. The heads of SIBUR and TAIF announced the beginning of the merger of the companies' petrochemical businesses.
In the presence of Deputy Prime Minister of Russia Alexander Novak, President of Tatarstan Rustam Minnikhanov, Chairperson of the Board of Directors of TAIF JSC Albert Shigabutdinov, Director General of TAIF JSC Ruslan Shigabutdinov, Chairperson of the management board of NOVATEK PJSC Leonid Mikhelson, Chairperson of the management board of SIBUR Holding PJSC Dmitry Konov, it was officially announced that within the framework of the merger, a company will be created on the basis of SIBUR Holding PJSC, in which the current shareholders of TAIF JSC will receive a 15% stake in exchange for the transfer of the controlling stake in the group, which consists of petrochemical and energy companies. The remaining stake of TAIF JSC may be subsequently purchased by the united company.
The deal will be closed subject to passing the necessary corporate procedures and obtaining regulatory approvals.
The creation of the consolidated company will increase the stability of its petrochemical business and competitiveness in the global market, create additional opportunities for the growth of Russian petrochemical industry, taking into account its high capital intensity, further growth of chemical non-raw materials exports, will lead to the creation of new jobs and will provide new opportunities to address the issues of sustainable development and the environment.
The company will get a large-scale synergy effect due to the diversification of the raw material base, optimisation of distribution and logistics, development of the R&D block, as well as improving the operational efficiency of assets. After the completion of all investment projects under implementation, the consolidated company will enter the top 5 global leaders in the production of polyolefins and rubbers.
The consolidated company will ensure the efficient distribution of raw materials flows necessary for the full capacity utilisation and further development of the petrochemical cluster in Tatarstan, as well as continue to finance the approved investment programme of TAIF JSC, the development of the group's assets, and maintain the experience accumulated by TAIF in business management and the human capital of the group's enterprises.
Konov: “TAIF is the unique product portfolio and technology”
After the solemn signing, Russian Deputy Prime Minister Alexander Novak said:
“Today we are really present at a landmark event for the petrochemical industry of our country — the merger of our two largest companies, the creation of the consolidated company based on SIBUR and TAIF. This will provide an additional driver for the development of this industry. The growth rate of oil and gas chemistry worldwide is up to one and a half times higher than the growth rate of the global economy, and there are huge prospects. Our country has huge reserves of hydrocarbon and should take the leading position in the world markets, for this the industry will develop, and the government of Russia is creating conditions. Amendments to the legislation have recently been adopted to allow the use of the reverse excise mechanism to encourage the use of ethane, LPG in the petrochemical industry. Such measures should give an additional impetus to the development of this industry, which, in turn, with a deeper use of our natural resources, gives a higher added value. At the same time, we believe that over the next few decades, the volume of investments in this industry can reach about $70 billion, and about 10,000 jobs will be created. This will provide revenue to budgets of all levels. This event is an impetus for the development of the petrochemical industry and the regions where the companies are represented. We hope that the company's plans will be implemented, I am sure that everything will work out and the company will become a strong world leader.”
President of Tatarstan Rustam Minnikhanov congratulated on the landmark event:
“I would like to congratulate our colleagues, TAIF Group, and SIBUR on this landmark event. SIBUR has always been our partner. We have worked together on many projects, we know each other well, and in the current conditions, the federal government has decided to implement large projects in the oil and gas sector — this merger will have a very serious effect. I am sure that the volumes at the enterprises of Nizhnekamskneftekhim and Kazanorgsintez will double. This means jobs, budget revenues. We believe that petrochemistry is a growth point for the Republic of Tatarstan, and we will support these projects. I wish us successful and good work.”
According to Dmitry Konov, the chairperson of the management board of SIBUR Holding PJSC, TAIF Group has the unique product portfolio and technologies that, together with SIBUR's competencies, will enable the consolidated company to successfully implement the ambitious growth programme. “The consolidation of our assets and professional teams will increase the productivity of the leading petrochemical enterprises and significantly strengthen the position of the Russian petrochemical industry in the global market," Dmitry Konov expressed hope.
“TAIF and SIBUR have developed very dynamically in recent years. We understand that the government of the country sees petrochemistry as an important resource in the implementation of a number of national projects," Dmitry Konov continued. “By combining our efforts, we can do much more in increasing non-oil exports and the depth of processing of hydrocarbon raw materials than both companies have done so far. I am happy for the employees of both companies, to whom we are sincerely grateful. We highly value the human resources, competencies, and experience of TAIF employees, and we are confident that with these resources, the two Russian companies, when united, will do much more in terms of the development of the country and the development of the regions where they operate. First of all, in the context of today's deal — we can do a lot in Tatarstan. This will be seen in the physically created new production facilities, as well as in the high level of income of our employees, new jobs and the development of related areas.”
In turn, the chairperson of the board of directors of SIBUR, Leonid Mikhelson, said:
“I would like to recall the story. The first idea that this should be done, Mr Minnikhanov, you remember, was born 10 years ago. SIBUR made large investments in the raw material base. The spirit of these companies is somewhat similar: they strive to make the most modern investment projects, to enter new products. Mr Minnikhanov said that in 3-4 years, and not in 10 years, we would see the results of the merger. In some part, the meeting, which Vladimir Vladimirovich conducted from Tobolsk, that it was necessary to develop oil and gas chemistry, prompted, and they decided and agreed. For the united company, so that it makes investments with leaps and bounds and wins a worthy place in the global oil and gas market!”
Chairperson of the board of directors of TAIF JSC Albert Shigabutdinov noted that the merger of the companies carries a huge potential for the development of the domestic petrochemical industry.
“This will allow TAIF Group to significantly accelerate the implementation of projects included in the TAIF Group's Development Strategy until 2030, the amount of investments for which in the next 10 years will amount to more than 1,5 trillion rubles, increase the productivity of our enterprises, and expand the range of commercial products. By 2030, tax payments are expeted to significantly increase, including to the consolidated budget of the Republic of Tatarstan to 50 billion rubles a year. And from now on, we are guaranteed to provide targeted quality resources, which, like air, have been lacking all our lives," Albert Shigabutdinov said.
SIBUR is the largest integrated petrochemical company in Russia and one of the most dynamically developing companies in the global petrochemical industry with more than 23,000 employees, including 5,000 employees of NIPIGAS. The unique vertically integrated business model allows SIBUR to create highly competitive products that are used in the production of consumer goods and automobiles, construction, energy, as well as in chemical industry and other industries in 90 countries around the world.
SIBUR processes the by-products of oil and gas production and thus contributes to the reduction of CO emissions from their combustion.
In 2020, SIBUR's revenue was 7,2 billion USD and EBITDA — 2,5 billion USD. Over the past 10 years, SIBUR has implemented a number of large-scale investment projects worth 1 trillion rubles.
TAIF JSC — the parent company of the largest non-public group in the Russian Federation. TAIF JSC was established in August 1995. The Group operates in many areas, the key of which are the following: oil and gas processing, chemistry, petrochemistry, power engineering, investment activities. The enterprises in the field of chemistry and petrochemistry of TAIF Group produce 581 types of products, of which synthetic rubbers, various types and brands of polyethylene, polypropylene, polycarbonate and styrene plastics are large-capacity.
By the results of 2020, the share of TAIF Group in the total production of Russia was 64% for rubbers, 28% for plastics, while TAIF Group is the only manufacturer of polycarbonates, savilene and a number of other popular types of polymer products in Russia. The total staff number of the group is 36,000 people.