National Shipping Co. of Saudi Arabia and the country’s state-owned oil company signed an initial agreement to merge their fleets in a combination worth $1.3 billion.
National Shipping said today in a stock-exchange statement it will pay $832.8 million to Saudi Arabian Oil Co.’s Vela International Marine Ltd. unit. It also will issue 78.8 million new shares to the subsidiary at 22.25 riyals ($5.93) each under the nonbinding accord, giving Vela a 20 percent stake in National Shipping after the stock is issued.
The Riyadh-based National Shipping said it will raise the money for the transaction through different financing sources.
National Shipping will be the sole carrier for crude pumped by Saudi Aramco, as the state company is known, under long-duration contracts, according to the statement. The merger will make National Shipping the industry’s fourth-largest owner of very large crude carriers.
The new fleet will also include 20 chemical tankers, 4 refined product tankers, and 16 vessels under-construction, and this “would also expand the ability of Saudi Aramco and the Kingdom to meet future maritime transport needs for its expanding downstream businesses,” Saudi Aramco said in an e-mailed statement today. The two companies plan to explore ways to expand their cooperation in the maritime sector, Aramco said in the statement.
The companies plan to sign a final accord in the fourth quarter and complete the combination in 2013, according to the statement.
National Shipping appointed JPMorgan Chase & Co.’s Saudi unit as a financial adviser on the transaction and Saudi Aramco, the world’s biggest oil exporter, hired the local division of HSBC Holdings Plc.