Aramco says a report it’s talking to Santos is “inaccurate” and Stc’s bid for Altice Portugal has reportedly failed

Good morning, friends, and welcome to a busy news day packed with M&A and investment news and an interview with Steve Lutes, the US Chamber of Commerce’s lead for our part of the world, on the state of play in the bilateral relationship. Let’s jump right in:

HAPPENING TODAY-

It’s wholesale and retail week, organized by the Small and Medium Enterprises General Authority (Monsha'at), the authority said in a statement. Networking between business owners and government officials is one of the key features of the event, which will see activities at SME support centers in Riyadh, Jeddah, Madinah, and Khobar running through Thursday, 11 July. You can register here.

Speaking of SMEs: They’re enjoying more access to credit. Credit facilities to micro, small and medium enterprises (MSMEs) in the Kingdom rose 16.3% y-o-y in 1Q 2024 to SAR 293.4 bn, according to Sama’s monthly bulletin (pdf). Banks provided 94% of that figure, while non-bank financial services firms accounted for the rest.

WEATHER- Expect hazy skies in Riyadh with a daytime high of 42°C, while Makkah will see the mercury will peak at 43°C. Expect some wind in Madinah today and a high of 44°C.

M&A WATCH-

#1- Oil giant Aramco said media reports of it exploring a bid for Australian oil and gas firm Santos were “inaccurate,” Reuters reported, citing an emailed statement. The remarks by an Aramco spokesperson came after Bloomberg reported Aramco and the UAE’s Adnoc were separately considering bids for Santos, company, which has liquefied natural gas projects in Australia, Papua New Guinea, and Timor-Leste, and a market cap of c. USD 17.4 bn

#2- Stc’s bid to buy Altice’s Portugal operations has reportedly failed. Telecoms giant stc and Patrick Drahi, the owner of European telecom group Altice, reportedly ended talks that would have seen stc buy Altice’s telecoms business in Portugal, Portuguese business newspaper Eco reports. Talks reportedly collapsed after the two parties disagreed on the final price, Eco cites sources as saying. Stc submitted two months ago the highest binding offer to acquire Altice Portugal, which Eco estimates is worth c. USD 8 bn.

BACKGROUND- Interest from STC, which is 64% owned by the Public Investment Fund, and others come as Drahi looks to sell shares in a bid to pay down debt. Drahi was hoping to bag a lofty EUR 10 bn from the sale, a price tag that scared off most potential buyers.

PIF WATCH

USD 500 mn investment in Hong Kong: The Public Investment Fund (PIF) signed a non-binding MoU with financial services outfit Hong Kong Chaoshang Group that could see the fund invest a total of USD 500 mn over a five-year period, according to a statement (pdf).

What’s Chaoshang? The Hong Kong-listed firm focuses on trading, lending and factoring, and financial leasing. It has lined up a USD 100 mn convertible and a USD 400 mn loan. They now have three months to ink a definitive agreement.

Where’s the money going? Chaoshang would use the funds to support its working capital and expand its business, as well as “undertake strategic initiatives including but not limited to investments into different industries such as mining and healthcare and / or other sectors as the opportunities arise.”

In context: Tadawul, the PIF, Aramco, and Neom are among the high-profile Saudi institutions that have led a steady charge to deepen business and investment ties between Saudi and China in the past 10 months or so.

RETAIL WATCH-

#1- US private equity firm L Catterton is mulling the full exit of its stake in gourmet food brand Bateel, the grower and retailer of our favorite brand of dates, Bloomberg reports citing people it says have knowledge of the matter.

How much is in play? The PE firm, which is backed by global luxury fashion house LVMH, is reportedly working with UBS to sell a stake of nearly 20% stake. L Catterton had initially bought into Bateel back in 2015 in an international expansion push.

And a capital increase? Bateel’s majority shareholders, Al Sudairi family, may sell more shares in the company as it looks to drum up capital to fund growth plans, the sources said. No further information was provided.

About Bateel: It started as a date farming business in 1936 before expanding to open boutiques for its premium dates and opening a number of cafes and restaurants here and globally.

#2- BinDawood to sell franchise rights in Qatar: Tadawul-listed supermarket group BinDawood Holding has inked a non-binding MoU with Qatar-based Regional Group Company to provide commercial franchise rights for the opening of eight branches under the "BinDawood" brand in Qatar, it said in a disclosure to Tadawul. BinDawood provided no further information on when the supermarkets might open, how much the agreement might be worth, or whether it was taking a stake or offering technical assistance as part of the potential transaction.

WATCH THIS SPACE-

Senegal looks set to scrap a planned desalination project by renewables giant Acwa Power, Reuters reported, citing statements by the West African country’s Water and Sanitation Minister, Cheikh Tidiane Diey. “The price of water will become more expensive in the long run because of the technology used to produce it,” the minister said in televised statements. “I said that it [the project] is not going to happen.”

Dakar would be turning its back on what could have been the Subsahara's largest desalination plant. Acwa Power signed the contracts for USD 800 mn project back in March.

OIL WATCH-

#1- Aramco slashed the official selling price for sales to its Asian customers for a second consecutive month, Bloomberg reported.

#2- The Kingdom’s overseas crude shipments hit a 10-month low in June at 168 mn barrels — about 5.6 mn barrels a day — as summertime demand for energy peaks, Bloomberg reports, citing vessel tracking data and other data providers. The figure for daily exports is only 250k barrels above the lowest level since the pandemic in 2020. Shipments of Saudi crude to China hit its lowest since mid-2020 with 1.27 mn barrels a day, with exports to India reporting its lowest since mid-2021.

SIGN OF THE TIMES- Is the pace of investment in new production slowing? That’s one way of interpreting the latest Baker Hughes Worldwide Rig Count Report, which shows that:

• The Middle East added only one net new rig in June compared to the previous month, bringing the total deployed to 342 units (+13 units y-o-y). Saudi Arabia has 85 rigs in the field.
• The total number of rigs deployed internationally rose by 32 units m-o-m in June to 1.7k, but by 93 units from the same month last year. Excluding Canada and the US, the international rig count grew only four units m-o-m to 957.

***
DID YOU KNOW that we also cover Egypt and the UAE?

Want to subscribe? Tap or click here to get your own copy of EnterpriseAM Saudi delivered every weekday before 7am Riyadh time — without charge, thanks to our friends at Cenomi.
***

THE BIG STORY ABROAD-

The US presidential election is once again front and center in the global business press, with pressure on Joe Biden to quit the race for the White House continuing to build nine days after his disastrous debate performance against Donald Trump. His first televised post-debate interview over the weekend with ABC News (watch, runtime: 31:23) failed to quell concerns about his age and ability to secure a second term in the White House, with the Wall Street Journal describing Biden’s defiant tone as a president in denial .

Major donors, political strategists, elected officials, and rank-and-file party members are calling on Biden to “pass the torch,” but Biden has knuckled down, telling ABC that only “the Lord almighty” could convince him to drop out of the race.

The year of elections is continuing to live up to its name elsewhere in the world, with Iran electing Masoud Pezeshkian to the presidency — the country first reformist president in two decades. Over in the United Kingdom, Keir Starmer has formed a government after a Labour Party landslide that saw the Conservative Party’s worst result in nearly two centuries.

In our corner of the world, a temporary Gaza ceasefire may once again be in reach, after Hamas accepted a US proposal to open talks on the release of Israeli hostages and dropped its long-standing demand that Israel agree to a permanent ceasefire before inking any agreement. Israeli and US delegations are set to arrive in Egypt to discuss a truce, an unnamed high-level government official told Al Qahera News.

With little to no business news in sight this morning, some outlets have picked on how European exports of cognac have allegedly become the latest casualty in the tit-for-tat trade war between the EU and China, according to comments yesterday from the finance head of luxury goods conglomerate and Hennesy cognac parent company LVMH. The EU’s third largest market for exports announced that it would hold a hearing on an anti-dumping probe into cognac from the bloc on Friday, two days after the bloc raised tariffs on Chinese-made EVs from some manufacturers by up to 38%.