Abu Dhabi National Oil Company and Austria's OMV (OMVV.VI) will merge their polyolefin businesses to create a chemicals powerhouse with a $60 billion enterprise value, the companies said, as the Gulf state oil firm advances its 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 (XOM.N), 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 (BOROUGE.AD), 54% owned by ADNOC and 36% by Borealis.
OMV shares rose as much as 4% and were up 0.28% at 0943 GMT.
The merged entity will also acquire Canada's Nova Chemicals Corp from Abu Dhabi's 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 on Monday and Tuesday.
The tie-up "further future-proofs ADNOC and solidifies Abu Dhabi's status as a leader in the chemicals sector, as we seek to meet the growing global demand for chemicals and associated products," ADNOC Group Chief Executive Sultan Al Jaber said.
The deal, subject to regulatory approvals, marks the conclusion of nearly two years of negotiations.
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
The new company will be headquartered in Austria, and have a two-tier board structure with governance and voting rights split equally between OMV and ADNOC.
"The supervisory board will have five representatives from OMV, five representatives from ADNOC, and potentially five employee representatives," Stern said.
The merger is expected to close in the first quarter of 2026. The new entity will look 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 CFO Reinhard Florey said.
ADNOC had already agreed in October to buy German chemicals maker Covestro for 14.7 billion euros ($15.5 billion)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 "makes this a multi-faceted transaction which 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)
