The Austrian company OMV announced today, Friday, that it will enter negotiations with Abu Dhabi National Oil Company (ADNOC) to create a giant chemicals company by combining Borealis and Borouge. It added that the plan is for the two companies to form a joint venture owned equally by both and listed on the stock exchange, serving as a platform for acquisitions aimed at growth to establish a global polyolefins company with a presence in major markets.
The company noted that under the plan, both companies will become "equal partners in a publicly traded entity subject to joint control, serving as a basis for acquisitions aimed at growth to form a global polyolefins company." OMV stated that the deal is contingent on several criteria, including the valuation of both companies, in addition to the approval of the management board of the Austrian group and regulatory bodies and antitrust authorities.
If completed, the deal will involve the merger of Borealis, owned by OMV and ADNOC at shares of 75% and 25% respectively, and Borouge, owned by ADNOC and Borealis at shares of 54% and 36% respectively.
OMV CEO Alfred Stern stated that the deal has a "strong and compelling industrial logic." Stern added, "The merger of these two complementary companies will combine Borealis's technical expertise and its specialized and sustainable solutions in the polyolefins field with Borouge's cost position and market reach."
Analysts at Goldman Sachs noted, "The merger of the two companies will allow the new company to grow in size." They added, "We also observe that Borealis's proprietary technologies greatly contribute to enabling Borouge in terms of technical and innovative capabilities, while Borealis also distributes the quantities sold by Borouge in Europe and the United States."
It is worth mentioning that Borealis and Borouge are major companies in the chemicals and plastics sector, with OMV and ADNOC holding stakes in them.
