Sumitomo Chemical Sells Shares Then Buys Shares, What Is The Intention?

On October 22, Japan's chemical giant Sumitomo Chemical announced the completion of its share adjustment transaction with Saudi Rabigh Refining and Petrochemical Company (Petro Rabigh). This operation, which involved the sale and subscription of shares, not only solidified Saudi Aramco's position as the largest shareholder but also brought Sumitomo Chemical a financial impact of several billion yen.

Sumitomo Chemical: As one of the leading parties in this transaction, Sumitomo Chemical is no ordinary company. Founded in 1913, this Japanese company initially started by extracting sulfur from copper mines to produce fertilizers in order to address the issue of pollution from copper smelting waste gases. Today, it has evolved into a top global integrated chemical company.

After a century of development, Sumitomo Chemical's business has long covered four major fields, ranging from agricultural-related products such as pesticides and feed additives, to petrochemicals and fine chemicals, and even to high-end fields such as semiconductor materials and pharmaceuticals. As of March 2025, the company has nearly 30,000 employees worldwide, with 12 R&D and production bases in Japan and 62 overseas bases. Its overseas sales account for as much as 69.9%, making it a truly global enterprise. It is worth mentioning that Petro Rabigh is an important overseas project that Sumitomo Chemical participated in promoting and commissioning in 2009.

Saudi Aramco: The "Giant" of the Global Energy Sector. With a history of 91 years, Saudi Aramco is an integrated energy and chemicals company that manages Saudi Arabia's rich hydrocarbon resources, boasting crude oil reserves of up to 251.2 billion barrels. As a leader in the global oil industry, it not only ensures global energy supply but also actively positions itself in energy transition by leveraging technological innovations to reduce carbon emissions, making it one of the companies in the oil and gas sector with the lowest carbon footprint.

Petro Rabigh: The core asset in this transaction, Petro Rabigh, is a refining and chemical giant jointly established by Saudi Aramco and Sumitomo Chemical. It primarily produces various refined petroleum and petrochemical products such as heavy oil, light oil, naphtha, and kerosene. Before this transaction, the two companies each held a 37.5% stake, and this share adjustment is precisely to help this enterprise "revitalize and sustain life."

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This transaction dates back to August 2024. At that time, Sumitomo Chemical reached an agreement with Saudi Aramco, planning to improve the financial structure of Petro Rabigh through a series of operations to support its transformation plan. After more than a year of progress, two key operations have been completed recently.

On October 8, Sumitomo Chemical sold part of its Class A common shares in Petro Rabigh to Saudi Aramco, reducing its stake from nearly 37.5% directly to 15%. Meanwhile, Saudi Aramco's stake soared to nearly 60%, officially becoming the largest shareholder of Petro Rabigh's Class A shares. These Class A shares are common shares with voting rights, which means Saudi Aramco will have more influence.

Two weeks later, on October 21, Sumitomo Chemical, together with Saudi Aramco, completed the subscription of newly issued Class B common shares of Petro Rabigh. These shares do not carry voting rights but will enjoy dividends at a floating rate starting from 2028. Subsequently, Petro Rabigh will also reduce the par value of Class A shares to implement a capital reduction upon approval, with the entire process being interconnected.

In simple terms, Sumitomo Chemical first sold a portion of its "voting shares" and then used the proceeds to buy "dividend-paying shares," while Saudi Aramco further solidified its control through "taking over and increasing investment." All of this is aimed at helping Petro Rabigh repay debt early, reduce losses, and advance its transformation plan.

For Petro Rabigh, this transaction is a crucial step in its transformation. With Saudi Aramco becoming the largest shareholder, both parties will promote deeper integration and accelerate the implementation of the revitalization strategy to improve the company's financial situation. Although Sumitomo Chemical's shareholding ratio has significantly decreased, it has stated that Petro Rabigh will still be accounted for as an associate under the equity method, and it will continue to support the transformation plan in the future.