Shipping Companies Sign $1.3 Million Merger to Create Shipping Giant
Leaders from the National Shipping Company of Saudi Arabia (Bahri) and Saudi Aramco signed a non-binding memorandum of understanding June 27 to combine their fleets. Bahri would be the fourth-largest owner of very large crude carrier ships.
A proposed $1.3 billion merger of two big Middle East shipping companies made headlines in maritime circles June 27. The National Shipping Company of Saudi Arabia (Bahri) and Saudi Aramco announced their leaders had signed a non-binding memorandum of understanding that day at Dhahran, Saudi Aramco’s headquarters, to combine their fleets. When the merger is completed, Bahri will be operating 77 vessels in all, including 32 very large crude carrier (VLCC) ships, 20 chemical tankers, five product tankers, four roll-on roll-off ships, and 16 vessels now under construction. It will be fourth-largest owner of VLCCs in the world, according to the two companies.
Bahri employs about 1,320 seafarers and 332 shore staff globally, and it is a joint stock company listed on Tadawul, the stock exchange of the Kingdom of Saudi Arabia. Saudi Aramco is the kingdom’s state-owned oil company with offices worldwide, and it ranks as one of the world’s biggest oil and gas producers and refiners.
Bahri, headquartered in Riyadh, is agreeing to be the exclusive provider of VLCC crude oil shipping services to Saudi Aramco under a long-term agreement. It will pay Vela International Marine Ltd. -– Saudi Aramco’s shipping subsidiary, which employs about 800 seafarers and 150 shore staff -- a cash payment of $832.75 million in U.S. dollars and 78,750,000 new Bahri shares.
Bahri Chairman Abdullah Al-Rubaian and Saudi Aramco Senior Vice President Khalid G. Al-Buainain, who is chairman of Vela, signed the MOU. The two companies will work toward signing the definitive transaction documentation in the fourth quarter of 2012 and completing the transaction in 2013.