Abu Dhabi National Oil Company and Austria’s OMV expect to complete by the end of March a mega-merger to create a global chemicals giant, the companies said on Thursday, after years of talks.
The deal, first made public in July 2023, will combine Abu Dhabi-listed Borouge and Europe’s Borealis, alongside the acquisition of Nova Chemicals from Abu Dhabi wealth fund Mubadala, to form Borouge Group International, or BGI.
Once the deal is finalised, OMV and ADNOC’s international investment arm, XRG, will jointly own the new entity.
UNDER ATTACK AS IRAN RETALIATES
ADNOC facilities are among those that have come under attack as Iran retaliated against Israeli attacks on its gas facilities on Wednesday that marked the biggest escalation of the nearly three-week U.S.-Israeli war.
A source who asked not to be named said the merger was a long-term play and was going ahead despite the regional conflict.
To boost the new company, ADNOC and OMV said they had agreed to let BGI operate and sell products from Borouge 4, a new polyolefins plant owned 70% by ADNOC and 30% by OMV. This arrangement is expected to generate $400 million in cumulative net profit over the next three years, they said in a statement.
The plant will start operations this quarter, but BGI will not buy the facility outright from ADNOC and OMV until at least 2029 in an effort to save cash in the near term.
They added they expected the new company to receive strong investment-grade credit ratings from major agencies.
A planned tender offer to convert existing Borouge shares into BGI shares is scheduled for 2027. Until then, BGI will remain privately held and Borouge will remain listed in Abu Dhabi and pay its planned annual dividend, a commitment BGI will maintain after the tender offer.
Source: Reuters.com