ADNOC and OMV to enter talks regarding chemicals giant JV

Abu Dhabi National Oil Co (ADNOC) has announced its plans to enter negotiations with OMV to create a chemicals giant by combining two entities in which both companies own stakes.

The deal, if realised, will include a merger of petrochemicals group Borealis – which is owned by OMV and ADNOC in a 75:25 split – and Borouge, which is 54:36 owned by ADNOC and Borealis.

Under the plan, OMV said both Borealis and Borouge would become “equal partners under a jointly controlled, listed platform for potential growth acquisitions to create a global polyolefin company”.

The potential tie-up would create a global heavyweight with combined annual sales of more than $20 billion.

OMV Chief Executive Alfred Stern said the transaction had “strong and compelling industrial logic”.

“Combining the two complementary businesses would bring together Borealis’ technological expertise, and specialty and sustainable polyolefins solutions, with Borouge’s advantageous cost position and access to attractive markets,” he said.

OMV said any transaction depended on several criteria, including the valuation of both businesses as well as the approval of the Austrian group’s management and supervisory boards and antitrust authorities.

Said ADNOC in a press release, “ADNOC is undertaking these negotiations as majority shareholder of Borouge, and OMV as majority shareholder in Borealis, with any final decision subject to Borouge’s, and other relevant parties’, governance processes. The potential merger would mark the next transformative milestone in ADNOC’s ongoing value creation and chemicals growth strategy, with any transaction subject to customary regulatory clearances.”