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Clifford Chance and Al Jadaan & Partners Law Firm advise on a proposed US$1.3 billion Saudi shipping merger

14 November 2012

Clifford Chance and Al Jadaan & Partners Law Firm advise on a proposed US$1.3 billion Saudi shipping merger

International law firm Clifford Chance, in conjunction with Al Jadaan & Partners Law Firm, has advised The National Shipping Company of Saudi Arabia (Bahri) in relation to the proposed US$1.3 billion merger of the fleets and operations of Bahri and Vela International Marine Ltd., a wholly-owned subsidiary of Saudi Aramco. The definitive transaction documents were signed in Riyadh on 4 November 2012.

The merger of the fleets, personnel and business systems of Vela and Bahri, along with management responsibility for Saudi Aramco's very large crude carrier (VLCC) transportation system, will be implemented within the corporate structure of Bahri. Upon completion of the proposed transaction, Bahri will become the fourth largest owner of VLCCs globally and will be able to develop its role as a national shipping champion in Saudi Arabia.  Furthermore, under the terms of a long-term shipping contract, Bahri will become the exclusive provider of VLCC crude oil shipping services to Saudi Aramco for crude oil sold by Saudi Aramco on a delivered basis.

Under the terms of the proposed transaction, Bahri will pay Vela a total consideration (comprising cash and new shares in Bahri) of US$1.3 billion, making this one of the largest M&A deals in Saudi Arabia announced this year.  The proposed transaction is subject to a number of conditions, including the approval of the transaction and the related capital increase by Bahri's shareholders at an Extraordinary General Assembly and receipt of required approvals from relevant regulatory authorities including, without limitation, the approval of the Capital Market Authority and Supreme Council for Petroleum and Mineral Affairs.

Mike Taylor, corporate partner at Clifford Chance Dubai, states: "We are delighted to have advised on such a key transaction in Saudi Arabia. The ability of our teams in Dubai and London, alongside Al-Jadaan & Partners Law Firm in Riyadh, to advise on a transaction of this significance and complexity reflects the combined strength of our leading regional corporate and equity capital markets practices."

Nick Swinburne, asset finance partner at Clifford Chance London, added: " We are very proud to have assisted Bahri in agreeing this transformational merger.  Clifford Chance and Al-Jadaan's ability to field an integrated team comprising personnel from multiple offices to advise across all shipping, corporate, competition and regulatory matters is testimony to our global transport and logistics sector expertise."

Clifford Chance's regional leading corporate practice is ranked in tier 1 in both Chambers and Legal 500 for both Saudi Arabia and the Middle East. In addition, Clifford Chance was also named Middle East Law Firm of the Year at both the 2012 IFLR Awards and the 2012 Legal Counsel Awards.  Clifford Chance is ranked tier 1 for asset finance worldwide in Chambers Global (for the eighth consecutive year).

For further information about this release contact Magdalena Suder.