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OMV and ADNOC Discussing a Potential Merger for Their Chemical Divisions

Austria’s OMV and Abu Dhabi National Oil Company (ADNOC) are in talks to merge their chemical divisions, aiming to create a global force in petrochemicals.

If finalized, this deal would be one of the largest in Europe this year. Photo: Shutterstock

The potential merger would bring together OMV’s chemicals arm, Borealis, and Borouge, the majority-owned chemicals company of ADNOC.

The proposed merger aims to establish “equal partners under a jointly controlled, listed platform for potential growth acquisitions” between Borealis and Borouge.

It would provide a strong industrial logic and create a global polyolefin company with combined annual sales exceeding $20 billion.

Both companies specialize in polyolefins, which are essential components of plastics and other products.

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OMV’s CEO, Alfred Stern, highlighted the significant industrial logic behind the potential transaction.

The merger would leverage Borealis’ technological expertise, specialty, and sustainable polyolefins solutions, and Borouge’s advantageous cost position and access to attractive markets.

By combining their strengths, the companies aim to position the UAE as a stronger contender in the growing petrochemicals sector.

ADNOC, one of the world’s largest oil producers, has been actively diversifying its revenues by expanding into the petrochemical sector.

This move aligns with the broader industry trend of energy companies betting on the continued expansion of the petrochemicals market as demand for oil slows or reverses in the transport sector.

The current ownership structure involves OMV’s 75% ownership of Borealis and ADNOC’s 25% stake, while ADNOC owns 54% of Borouge, with Borealis holding the remaining 36%.

The deal would be subject to agreeing on the valuation of both businesses with ADNOC, as well as obtaining approvals from regulators.

OMV has been emphasizing the importance of its chemicals division in its growth strategy.

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Stern stated that chemicals are “the growth engine” of the company, with a goal of reaching 50% of its operating results from the sector by 2030, up from the current 30%.

However, OMV has clarified that it does not plan to sell shares in Borealis.

ADNOC, under the leadership of Sultan al-Jaber, is committed to maximizing the value of the UAE’s resources by expanding its downstream production.

The company has earmarked $150 billion for investments in natural gas, chemicals, and clean energy as it transitions away from fossil fuels.

The potential merger between OMV and ADNOC’s chemical divisions represents a significant step toward creating a global polyolefin powerhouse.

The combined entity would benefit from the synergies and complementary strengths of Borealis and Borouge, further solidifying the UAE’s position in the petrochemicals sector.

As the negotiations progress, the valuation of the businesses and regulatory approvals will play a crucial role in determining the outcome of this potentially transformative merger.

To get in contact with feedback on this article please email us at publishing@krugmaninsights.com 

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