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Abu Dhabi National Oil Co. and Austria’s OMV AG are putting the final touches on a deal to create a petrochemical firm worth more than €30 billion ($32 billion), according to people with knowledge of the matter.
Officials may reach a breakthrough as soon as mid-November, when the two sides will meet to discuss details of the planned merger of Abu Dhabi-listed Borouge Plc with Borealis AG, the people said. They’re aiming to reach an agreement before year-end on the proposal, which could see Adnoc and OMV each hold 47% of the combined entity, the people said. That would leave 6% as free float.
OMV owns 75% of Borealis, with the remainder held by Adnoc, while Borouge is a partnership between Adnoc and Borealis. The deal could value Borealis at just above €10 billion while Borouge may be valued at nearly €20 billion, in line with its current market value, the people said.
The latest proposal envisions OMV injecting about €1.7 billion of cash into the joint company to ensure its stake is equal to Adnoc’s, they said. The parties are still negotiating the combined firm’s listing venue and headquarters location.
Attracting Investment
One possibility would have it based in Austria with a listing in Abu Dhabi, though the Austrian side has been pushing for a listing in Vienna at some point, some of the people said. Details of the transaction are still being discussed and could change, the people said, asking not to be identified because the information is private.
Shares of OMV jumped as much as 5.6% on Monday, the biggest intraday gain in four months. They were up 4.8% at 3:38 p.m. in Vienna, giving the company a market value of about €13.9 billion.
A spokesperson for Adnoc declined to comment. Representatives for OMV and its biggest shareholder, Austrian state-assets agency OeBAG, also declined to comment.
Adnoc Chief Executive Officer Sultan Al Jaber is hunting for deals to better compete with Saudi Aramco’s Sabic chemical unit, as well as develop the company’s own downstream and renewable energy operations. The oil giant is also separately working on an acquisition of German chemicals group Covestro AG.
Combining the two businesses would let Borealis tap cheap feedstock and new growth markets, while bringing Borouge technical expertise. The potential deal is part of broader plans by the United Arab Emirates to attract investment as well as build new industries.
OMV Chief Executive Officer Alfred Stern said last week there’s “compelling” industrial logic to a deal and said the aim is to create a combined listed company with “equal shares and equal rights. The merged group may provide a platform for further acquisitions, he said in July.
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