State-owned Saudi Arabian Oil Company (Saudi Aramco), the world’s top crude exporter, has agreed to buy about 1.4 trillion won ($1.2 billion) worth of stakes in Hyundai Oilbank Co. from Hyundai Heavy Industries, to become the second-biggest shareholder of the South Korean refiner.

Hyundai Heavy Industries Holdings said on Monday that it has signed a deal with Saudi Aramco to sell 17 percent of its shares in Hyundai Oilbank for about 1.4 trillion won. The deal also includes granting Saudi Aramco a call option rights to buy a 2.9 percent stake owned by Hyundai Heavy Industries later.

Saudi Aramco is said to have agreed to pay its counterpart 36,000 won per share of Hyundai Oilbank, suggesting that it has estimated the market cap of Hyundai Oilbank at about 10 trillion won.

Shares of Hyundai Heavy Industries Holdings finished 1.91 percent or 6,500 won higher at 346,000 won on Monday.

The latest stock purchase agreement was a follow-up to a pre-IPO stock deal struck in January that Saudi Aramco would buy a 19.9 percent stake in Hyundai Oilbank from Hyundai Heavy Industries Holdings, the holding company of the world’s largest shipbuilder.

Following the stock purchase, Saudi Aramco would become Hyundai Oilbank’s second-largest shareholder after No. 1 Hyundai Heavy Industries Holdings with 74.1 percent ownership. The shipbuilder’s stakeholding will fall to 71 percent once Saudi Aramco exercises its call option rights.

But Saudi Aramco’s ownership in Hyundai Oilbank stayed under 20 percent as more than 20 percent would place Hyundai Oilbank under S-Oil Corp., in which Saudi Aramco is the largest shareholder with 63 percent ownership, raising an antitrust issue in Korea.

Hyundai Heavy Industries plans to use the proceeds from the sale to invest in new projects and improve financial structure.

Following the massive stake purchase, Hyundai Oilbank’s initial public offering (IPO) that had been pushed back since 2017 is expected to be further postponed, market analysts expected. Hyundai Heavy Industries Holdings initially planned to secure 2 trillion won worth of funds from the IPO but the plan was stalled due to accounting issues at Samsung BioLogics Co.

By Kang Gye-man and Lee Eun-joo

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