ADNOC and OMV to merge petrochemical firms to create $60 billion giant
By Gursimran Mehar, Yousef Saba, Federico Maccioni and Abinaya V
(Reuters) -Abu Dhabi National Oil Company and Austria's OMV will merge their polyolefin businesses to create a chemicals powerhouse with a $60 billion enterprise value, as the Gulf state oil company advances an aggressive growth strategy.
The merged entity, Borouge Group International, is set to be the fourth largest polyolefins firm by production capacity, behind China's Sinopec and CNPC and U.S.-based ExxonMobil, ADNOC Downstream CEO Khaled Salmeen told Reuters.
Polyolefins are thermoplastics that include polyethylene and polypropylene, the most widely used plastics in the world.
Borouge Group will combine two joint ventures - Borealis, 75% owned by OMV and 25% by ADNOC, and Borouge, 54% owned by ADNOC and 36% by Borealis.
"We're bringing a global chemicals group to Austria," OMV CEO Alfred Stern told Reuters.
OMV shares rose as much as 4% before paring gains.
The merged entity will also acquire Canada's Nova Chemicals Corp from Abu Dhabi sovereign wealth fund Mubadala for $13.4 billion, including debt, as part of its strategy to expand in North America, the firms said in separate statements.
The tie-up "solidifies Abu Dhabi's status as a leader in the chemicals sector", ADNOC Group CEO Sultan Al Jaber said.
The deal, subject to regulatory approvals, marks the conclusion of nearly two years of negotiations. Stern said talks were drawn out because of the complexity of the deal, particularly bringing in Nova Chemicals.
Based on the expected share structure, Borouge Group could distribute total annual minimum dividends of around $2.2 billion, OMV CEO Alfred Stern said.
OMV will inject 1.6 billion euros ($1.68 billion) in cash into the new company, which will be listed in Abu Dhabi.
The injection, which will be adjusted by dividends paid out until completion, will equalise ADNOC and OMV's shareholding. Each will own nearly 47% of the new entity, with the remainder available as free float.
AUSTRIA LISTING IN SIGHT
Headquartered in Austria, the new firm will have a two-tier board structure with governance and voting rights split equally between OMV and ADNOC.
The two companies will have five representatives apiece on the supervisory board alongside potentially five employee representatives, Stern said.
The merger is expected to close in the first quarter of 2026. The new entity aims to raise up to $4 billion of primary capital in 2026 to be included in the relevant MSCI index.
"There will be, probably as of the year 2027, the opportunity to list also in Vienna on the Austrian Stock Exchange," OMV Chief Financial Officer Reinhard Florey said.
ADNOC had already agreed in October to buy German chemicals maker Covestro for 14.7 billion euros including debt.
Nova can produce 2.6 million metric tons of polyethylene a year and 4.2 million tons of ethylene.
The companies expect Borouge Group to generate annual cost savings of about $500 million.
Borouge's expansion project, Borouge 4, will be acquired by the merged entity at cost, estimated to be around $7.5 billion, including debt.
While the agreement with ADNOC is broadly in line with past reports, the accompanying agreements to buy Nova Chemicals and Borouge 4 mean the transaction "may take time for investors to digest", JPMorgan analysts said in a note.
Once complete, ADNOC's stake in Borouge Group will be transferred to XRG, the state oil firm's new international investment arm, ADNOC said.
($1 = 0.9545 euros)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
32 minutes ago
- Yahoo
Wind opponents sue Trump administration to block New York wind project
By Nate Raymond (Reuters) -Fishing companies and offshore wind opponents filed a lawsuit on Tuesday challenging the Trump administration's decision to reverse course and allow construction to resume on Empire Wind, a $5 billion wind farm project off New York's coast. Protect Our Coast New Jersey, Clean Ocean Action, ACK for Whales and 12 fishing industry participants in a lawsuit filed in federal court in Trenton, New Jersey, sought to reinstate a stop work order Interior Secretary Doug Burgum issued in April halting construction of Equinor's wind project. Burgum issued that order after Republican President Donald Trump on his first day back in office on January 20 directed his administration to halt offshore wind lease sales and stop the issuance of permits, leases and loans for both onshore and offshore wind projects. He did so while also moving to ramp up the federal government's support for the fossil fuel industry and maximize output in the United States. Trump as a candidate last year promised to end the offshore wind industry. But weeks after Burgum signed the stop-work order, the administration in a turnabout on May 19 allowed work to resume on Empire Wind, which is being developed by Norway's Equinor and is expected to provide power for half a million homes from 2027 onward. The administration did so in a compromise with New York that could also see canceled plans for a gas pipeline revived. Burgum said he was encouraged that New York Governor Kathy Hochul will now allow new gas pipeline capacity to move forward. Tuesday's lawsuit argued that the U.S. Bureau of Ocean Energy Management did not adhere to the requirements of the Administrative Procedure Act by failing to provide a basis for restoring the work permits. Bruce Afran, the plaintiffs' lawyer, said the administration had properly recognized the lack of investigation about serious environmental harm from Equinor's project. "The administration correctly pulled the Empire Wind work permit because of these concerns and had no basis to reinstate the work orders a month later," he said in a statement. "This lawsuit seeks to restore the stop work order." Equinor declined to comment on the lawsuit itself but in a statement said the project "has undergone years of rigorous permitting and studies, and secured all necessary federal, state and local approvals to begin construction in 2024." The agency did not respond to a request for comment.
Yahoo
32 minutes ago
- Yahoo
China calls on WTO for greater oversight on unilateral tariffs
BEIJING (Reuters) -China's commerce minister has called on the World Trade Organisation to strengthen supervision over unilateral tariffs, and put forward objective and neutral policy proposals, the ministry said on Wednesday. At a WTO ministerial meeting in France, Commerce Minister Wang Wentao reiterated China's stance on upholding a multilateral trading system and said WTO has the country's backing for a more important role in global economic governance. Wang also met with European Trade Commissioner Maros Sefcovic and had a "pragmatic and frank" discussion with his Canadian counterpart.
Yahoo
39 minutes ago
- Yahoo
Ex-Tory minister to advise Royal Mail's billionaire Czech owner
The Czech billionaire who has taken over Royal Mail has hired a former Conservative minister to advise him on his business interests. Greg Hands, who served as trade minister before losing his seat in last summer's election, will take up the role of special adviser to Daniel Kretinsky. Mr Kretinsky's EP Group said Mr Hands would provide strategic counsel focused on regulatory and market developments in the UK and Germany. It said the appointment would help the company to 'expand its portfolio across both countries, aligning with the company's commitment to secure and sustainable energy solutions'. It comes just weeks after Mr Kretinsky secured his £3.6bn takeover of Royal Mail in a deal that resulted in the postal service falling into foreign ownership for the first time in its 500-year history. In addition to Royal Mail, EP UK owns a number of energy assets in the UK, including a gas-fired power plant in Stallingborough and the South Humber Bank station, both in Lincolnshire. EP has enjoyed surging profits in recent years thanks to market turmoil sparked by Russia's invasion of Ukraine. It is also one of a handful of energy companies to have cashed in millions of pounds when Britain's wind farms are turned off because of congestion on the grid. Mr Kretinsky said: 'We are delighted to welcome Greg Hands to EP Group. His deep understanding of the UK and German business and energy landscapes, coupled with his extensive experience in government and international trade, will be invaluable as we navigate the evolving sectors in these key markets. 'Greg has unique capabilities for the job, including fluency in German and good Czech, and understands many of our markets very well.' Mr Hands said: 'I have known Daniel Kretinsky for a long time, and I know that EP Group has a strong track record in energy and infrastructure. 'I look forward to contributing to its continued growth and commitment to energy security and sustainable energy solutions in these regions.' While Mr Hands's role appears to be focused on Mr Kretinsky's energy assets, the appointment comes at a time when much of the billionaire's focus is likely to be on Royal Mail. He has outlined plans to invest heavily in parcels as he attempts to transform Royal Mail into a modern logistics giant. But he will also be required to navigate discussions with ministers and regulators over the future of Royal Mail's universal service obligations, which require it to deliver six days a week at a uniform price. Bosses have argued that stringent rules have left the company financially unsustainable amid a sharp decline in letter sending. Last month Ofcom said Royal Mail had missed its delivery targets in the latest financial year, raising the prospect of a potential fine for the third year running. The regulator is planning to allow Royal Mail to end second-class mail deliveries on alternate days and Saturdays and to water down its delivery targets. However, the company is still disputing so-called 'tail of the mail' back-up targets, which it argues will add 'significant' costs and further push up prices. Mr Kretinsky, who also owns a major stake in Dutch postal service PostNL, has already made a number of legally binding commitments – including maintaining Saturday deliveries for first-class letters, protecting the Royal Mail brand and keeping the company's headquarters and tax base in the UK – to help ease concerns about the deal. International Distribution Services (IDS), Royal Mail's parent company, on Monday confirmed its delisting from the London Stock Exchange and the resignation of a number of board members, including Keith Williams, the chairman. The Communication Workers Union, which represents postal employees, said the departures were 'welcome news' for staff across the UK. It said: 'Led by chairman Keith Williams, the previously senior leadership team have overseen the gross mismanagement of one of the UK's most important companies, they have destroyed the service provided to millions of customers and businesses and they have callously targeted their own workforce in the attempt to create a low wage, gig economy-style employer. 'Keith Williams and many of his colleagues represent everything that is wrong with modern business leaders: paid and rewarded for failure whilst having zero vision.' Mr Williams has argued that EP Group's takeover offer was fair and that the commitments 'should ensure that IDS continues to deliver the key elements of the universal service in the UK and protect the interests of the workforce'. Martin Seidenberg, the IDS chief executive, and Michael Snape, the IDS chief financial officer, will continue in their respective roles and remain on the board. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Sign in to access your portfolio
