Adnoc in talks with European energy giant for multibillion-dollar merger plans - Upstream Online

Adnoc in talks with European energy giant for multibillion-dollar merger plans | Upstream Online

Abu Dhabi National Oil Company (Adnoc) is in talks with Austria’s OMV over the potential merger of petrochemicals companies Borouge and Borealis, in which the two players hold key stakes.

The new combined entity would have potential sales of more than $20 billion per year, and the merger would be in line with Adnoc’s strategy to diversify its business beyond core oil and gas portfolios.

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

Adnoc confirmed the development on Saturday and said it “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”.

Borouge is listed on the Abu Dhabi Securities Exchange, with 54% stake owned by Adnoc, 36% by Borealis, and 10% held by retail and institutional investors.

The other key entity, Borealis, is owned 75% by OMV with Adnoc holding the balance 25%.

Adnoc said the “potential merger would mark the next transformative milestone” in the company’s ongoing value creation and chemicals growth strategy, with any transaction subject to customary regulatory clearances.

Chemicals giant

OMV also confirmed that it “will enter negotiations with Adnoc with a view to creating a chemicals giant from the combination of two entities in which both companies own stakes”.

OMV chief executive Alfred Stern said the “potential transaction would have a 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, that would create a new global polyolefin powerhouse with significant organic and inorganic growth potential,” he said.

Adnoc is a key stakeholder in OMV having acquired a 24.9% interest in the Austrian energy and chemicals player last year from compatriot Mubadala Investment Company.

The Emirati state giant said last year that through its investment in OMV, Adnoc will increase its shareholdings in domestic players Borealis and Borouge, bolstering its footprint in the chemicals sector.

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