ADNOC, OMV to Create Major Polyolefins Player

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ADNOC, OMV to Create Major Polyolefins Player

OMV AG and Abu Dhabi National Oil Co. PJSC (ADNOC) on Tuesday signed an agreement to consolidate their polyolefin businesses, with ADNOC also agreeing to acquire NOVA Chemicals Corp. to be transferred to the new joint venture (JV). Borealis AG and Borouge PLC will merge to form Borouge Group International. Austria’s state-backed integrated energy company […]

Borealis AG and Borouge PLC will merge to form Borouge Group International. Austria’s state-backed integrated energy company OMV owns 75 percent of Vienna-based Borealis while ADNOC holds the remaining 25 percent. In Abu Dhabi-based Borouge, ADNOC owns 54 percent and Borealis 36 percent while the remaining 10 percent is on free float.

The new JV will serve as a platform for acquisitions by ADNOC and OMV in the polyolefins sector. “Demand in polyolefins is expected to grow globally at a CAGR of 3.7 percent between 2024-2035”, a joint statement said citing data from Chemical Market Analytics. “This is being driven by higher demand growth regions and megatrends including population growth, healthcare and hygiene demand, materials needed for the energy transition, food waste and scarcity, as well as water access and sanitation”.

The first of these acquisitions would be NOVA Chemicals from Nova Chemicals Holdings GmbH, a subsidiary of the Abu Dhabi government-owned Mubadala Investment Co. PJSC. ADNOC signed a deal with Nova Chemicals Holdings for the $13.4 billion purchase, to be funded with debt.

The acquisition would make the planned JV the world’s fourth-biggest polyolefins company, the statement said. NOVA Chemicals says it produces about 8 billion pounds of ethylene a year in Canada and the United States.

Borouge Group International “brings together three highly complementary regional leaders with more than 11,000 employees, a proforma polyolefins capacity of 12.2 million tonnes p.a. [per annum] and olefin capacity of 11.4 million tonnes p.a.”, the statement said. “Borouge Group International will be geographically well balanced, with established leadership positions in key markets and access to attractive and high growth regions, including the Americas, Europe, Asia, and the Middle East”.

ADNOC and OMV expect to complete the Borealis-Borouge combination and the NOVA Chemicals acquisition in the first quarter of 2026 subject to regulatory approvals and other customary conditions.

OMV is expected to invest EUR 1.608 billion ($1.69 billion) in Borouge Group International. The commitment would be reduced by the amount of dividends paid until merger closure.

ADNOC and OMV would each own 46.94 percent of the JV. The remaining 6.12 percent is to be held by public float on the Abu Dhabi exchange, with plans for later listing on the Vienna bourse.

ADNOC holds the right to appoint the chair of Borouge Group International’s supervisory board, while the executive board will be unanimously formed. The JV will be based in the Austrian capital.

“These transformative transactions mark a pivotal milestone in ADNOC’s global chemicals strategy as we deliver on our international growth mandate”, commented ADNOC managing director and chief executive Sultan Ahmed Al Jaber. “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”.

Meanwhile ADNOC is in the process of completing its takeover of German chemicals producer Covestro AG with a share acquisition offer of about EUR 11.7 billion. ADNOC through its newly created investment platform XRG has so far bought around 91.32 percent of Covestro’s outstanding shares, exceeding the acceptance threshold for the acquisition, XRG said December 19, 2024. The takeover is expected to conclude in the second half of 2025.

OMV chief executive Alfred Stern said, “These landmark transactions… will accelerate our growth strategy in Chemicals and support OMV’s transformation into an integrated sustainable chemicals, fuels, and energy company”.

The ADNOC-OMV JV is expected to generate over $7 billion per annum of through-the-cycle earnings before interest, taxes, depreciation and amortization, ADNOC said.

“Supported by this stronger cash flow generation, the Company’s dividend policy will be based on a 90 percent payout ratio with potential upside for distribution based on free cash flow generation, with the objective of maintaining a minimum annual payout of 16.2 fils per share, representing a minimum 2 percent accretion vs. Borouge’s targeted full year 2024 DPS [dividend per share]”, ADNOC said in an earlier statement.

ADNOC plans to transfer its stake in the JV to XRG. XRG, announced November 27, 2024, with an enterprise value of more than $80 billion, aims to grow the United Arab Emirates’ share of the global chemical, low-carbon energy and natural gas markets. XRG would also manage Covestro.

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