ADNOC And OMV To Establish $60 Billion Global Leader In Polyolefins
ADNOC from the UAE and Austria's OMV have taken a significant step forward by merging their stakes in two major companies, Borouge plc and Borealis AG, leading to the formation of Borouge Group International.
This strategic move is set to transform the global chemicals industry. The newly established entity plans to expand its reach by purchasing NOVA Chemicals Corporation, a key player in North America, for a sum of AED49.2 billion.
This acquisition is a part of a broader strategy to establish Borouge Group International as a leading force in the chemicals sector, boasting a value of over AED220 billion and ranking as the fourth largest polyolefin producer globally.
The core objective behind the creation of Borouge Group International is to harness the strengths of Borouge, Borealis, and NOVA Chemicals. These companies are renowned for their innovation in polyolefin production, a critical material used across various industries, including manufacturing, medical supplies, and textiles.
By uniting these entities, Borouge Group International aims to leverage competitive feedstock, access to burgeoning markets, and leading-edge technologies. Additionally, the new conglomerate will focus on expanding its product range, from Borouge's advanced agricultural products to Borealis' textile innovations and NOVA's eco-friendly packaging solutions.
The integration of Borouge 4 into Borouge Group International by 2026, at an estimated cost of AED27.5 billion, will further cement its status as a global powerhouse with a production capacity of 13.6 million tonnes per annum across Europe, the Middle East, and North America.
Dr. Sultan Ahmed Al Jaber, ADNOC Managing Director and Group CEO, highlighted the significance of these transactions, stating, "These transformative transactions mark a pivotal milestone in ADNOC's global chemicals strategy as we deliver on our international growth mandate, under the guidance of the UAE leadership.
"Building on our 25-year strategic partnership with OMV, we will create a new industry powerhouse, with a portfolio of premium products, cutting-edge technologies and worldwide market access. The visionary combination of Borouge and Borealis and acquisition of Nova Chemicals, 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, while driving value creation and growth opportunities for our shareholders."
The new Borouge Group International will be co-owned and managed by ADNOC and OMV, with headquarters established in both Vienna and Abu Dhabi. To balance their shared ownership, OMV will contribute AED6.1 billion in cash. The collaboration aims to achieve approximately AED1.8 billion in annual synergies, promising enhanced dividends for Borouge plc's current shareholders, who will have stakes in the newly listed company on the Abu Dhabi Securities Exchange (ADX).
The formation of Borouge Group International is expected to fortify the strategic alliance between ADNOC and OMV, which has evolved over decades. Following the transaction's completion, ADNOC's interest in the new group will be transferred to XRG, its international energy investment arm.
Launched in 2024 with a valuation exceeding $80 billion, XRG embodies ADNOC's ambition to broaden its international footprint and maximise value across various domains, including gas, chemicals, low-carbon fuels, and energy infrastructure.
Borouge Group International stands as a testament to the strength of polyolefins, which are essential for producing everyday items from packaging to textiles. This merger not only underscores the importance of such materials but also signals a new era of innovation and growth in the chemicals industry, promising significant advancements and value creation in the years to come.
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