On March 4, 2025, Austrian oil and gas company OMV and the Abu Dhabi National Oil Company (ADNOC) announced their agreement on key commercial terms to merge their polyolefins businesses. This strategic move aims to combine Borealis and Borouge under the newly created joint venture named Borouge Group International. The joint venture will serve as a platform for both companies to pursue potential growth acquisitions within the polyolefins sector.
The announcement reveals plans for the joint venture company to acquire all shares of NOVA Chemicals for approximately USD 9.377 billion from Nova Chemicals Holding GmbH, which is wholly owned by Mubadala Investment Company PJSC. This acquisition is part of the broader strategy to strengthen their positions within the industry.
Both OMV and ADNOC are set to maintain equal shareholdings and joint control of the new entity. According to the agreement, OMV will contribute EUR 1.608 billion to the joint venture, based on valuations as of January 1, 2025. It is noted, though, this investment will be adjusted for dividends until the anticipated transaction completion by 2026.
The operational headquarters of the joint venture is established to be based in Austria, and the plan includes listing the new company on the Abu Dhabi Securities Exchange, with future intentions to also list on the Vienna Stock Exchange. Given the expected share structure, if all free-float shareholders of Borouge plc accept the offer for shares, OMV and ADNOC will each possess 46.94% of the joint venture, leaving 6.12% for independent shareholders.
Fundamentally, the acquisition of NOVA Chemicals will be financed through bridge financing, with provisions for refinancing involving up to USD 4 billion to increase the free float of the joint venture. Notably, OMV and ADNOC are not expected to participate financially in this capital increase, which aims to broaden the ownership spectrum of the new entity.
Both companies have expressed high expectations for the potential transaction. The signing of contractual documentation is anticipated to occur on the same day as the announcement, setting the wheels of this significant merger and acquisition strategy in motion. The specific agreements under negotiation include the framework agreement and the acquisition agreement for NOVA Chemicals, contingent on approval from both companies' supervisory boards.
Compliance with various regulations and legal requirements necessary for the completion of the transaction remains pivotal. This includes obtaining necessary approvals from executive bodies of both companies, negotiations for implementation agreements, and authorizations from relevant authorities, such as merger control clearances.
Despite this ambitious growth plan, OMV's existing dividend policy is projected to stay intact until the successful closure of the transaction, which is expected at least through the business year of 2025. The companies have conveyed their aim to uphold attractive shareholder distributions throughout this period and review the policy for potential alterations thereafter.
Overall, the merger of OMV and ADNOC's polyolefins businesses signals not only significant corporate collaboration but also positions both companies to leverage trends and growth opportunities within the polyolefins market. The joint venture intends to emerge as a competitive player, fostering developments and innovations as they move forward with their integrated operations.