Borouge Announces Strategic Moves To Create $60 Billion Global Petrochemical Champion

Borouge is set to inform the market about significant announcements from Abu Dhabi National Oil Company (ADNOC) and OMV Aktiengesellschaft (OMV). These announcements involve a binding Framework Agreement for merging Borouge and Borealis AG into Borouge Group International, alongside acquiring Nova Chemicals Corporation. An investor briefing will be held with ADNOC and XRG to discuss key transaction highlights.

Under the agreement, ADNOC and OMV will each hold 46.94% stakes in Borouge Group International, sharing joint control. The remaining 6.12% will be available as free float shares, pending approval from the Securities and Commodities Authority (SCA). This assumes existing Borouge shareholders agree to exchange their shares for those in the new entity.

The agreement outlines a primary cash injection of approximately €1.6 billion by OMV into Borouge Group International. This amount will be adjusted at closing based on equity value changes due to expected dividend payments before completion. The new entity aims to list on the Abu Dhabi Securities Exchange (ADX), subject to approvals from SCA and ADX.

Borouge Group International plans to acquire Nova for US$13.4 billion, including debt, enhancing its North American presence. This acquisition positions it as a global polyolefins leader, projected to become the fourth largest by production capacity. The transactions are anticipated to conclude in Q1 2026, contingent on regulatory approvals.

A key aspect of these transactions is ADNOC and OMV's commitment to reinvest in the Borouge 4 expansion project at an estimated cost of $7.5 billion. Once operational by late 2026, this project is expected to increase production capacity by 1.4 million tonnes annually and contribute approximately $900 million in EBITDA per year.

The combined platform will feature over 800 R&D experts, more than 16,500 patents, and seven innovation centres. This foundation supports differentiated product offerings and higher-value products. The margin profile of the new entity is expected to remain globally competitive while providing financial strength for future growth opportunities.

Synergies and Market Impact

The proposed transactions aim to unlock significant value through operational synergies, improved market access, accelerated innovation rollout, and advanced technology scaling. ADNOC and OMV estimate these synergies could deliver around $500 million additional run-rate EBITDA within three years post-completion.

Borouge Group International is poised for global leadership in circularity solutions, building on existing initiatives from Borouge, Borealis, and Nova. Both Borealis and Borouge have committed to achieving net zero emissions targets for Scope 1 and 2 before 2050.

Corporate Structure and Future Outlook

The headquarters of Borouge Group International will be located in Vienna with regional offices in Abu Dhabi, subject to regulatory approvals. Additional corporate hubs will be maintained in Calgary, Pittsburgh, and Singapore.

Hazeem Sultan Al Suwaidi, CEO of Borouge, stated that combining Borouge with Borealis and acquiring Nova offers substantial growth potential: "By combining the highly complementary strengths of three polyolefin leaders... strategic and financial value across multiple dimensions are being created."

Borouge Group International's dividend policy will focus on a 90% payout ratio with potential distribution upside based on free cash flow generation. The goal is maintaining a minimum annual payout of 16.2 fils per share, representing a minimum 2% accretion compared to Borouge’s targeted full-year 2024 DPS.

Borouge remains committed to full compliance with governance obligations by making necessary market disclosures related to these transactions.

With inputs from WAM