ADNOC buys 25% stake in 68-year-old Austrian chemical group

Image courtesy: Akos Stiller/ Getty Images

UAE’s ADNOC Group has formally closed the acquisition of a 24.9 per cent stake in 68-year-old Austrian oil and gas group OMV from Abu Dhabi wealth fund Mubadala Investment Company, as the state-owned energy firm advances the growth of its petrochemicals business.

“The transaction accelerates delivery of ADNOC’s global chemicals growth strategy and reinforces its status as a responsible, long-term partner and growth-oriented investor,” ADNOC said in a statement.

“Building on our 25 per cent shareholding in Borealis, this transaction marks the next transformative step as we accelerate our ambitious chemicals growth strategy, unlocking significant growth and value creation opportunities for ADNOC, OMV and their respective shareholders,” said Khaled Salmeen, executive director, Downstream Industry, Marketing & Trading at ADNOC.

The financial details of the deal were not disclosed. Following the deal, ADNOC now owns a 24.9 per cent stake in OMV, Austrian holding firm Österreichische Beteiligungs holds a 31.5 per cent shareholding and the remaining share capital in free float.

ADNOC said through the deal it has increased its shareholdings in both petrochemicals group Borealis and Abu Dhabi-listed Borouge, without disclosing the ownership ratios.

The state energy firm expects the investment to further bolster its footprint in the chemicals sector, enabling synergies and unlocking significant growth opportunities.

The company said it intends to nominate two representatives to the OMV supervisory board.

ADNOC pursue Borouge, Borealis merger

ADNOC said it is still negotiating with OMV over the proposed merger of Borouge and Borealis, a deal that is expected to create a petrochemicals giant worth more than $32bn (EUR30bn).

Borouge is listed on the Abu Dhabi Securities Exchange with 54 per cent owned by ADNOC, 36 per cent by Borealis, and 10 per cent held by retail and institutional investors. Borealis is owned 75 per cent by OMV with ADNOC holding 25 per cent.

The Abu Dhabi energy giant said the potential merger, which is subject to regulatory approvals, would mark the next transformative milestone in the company’s ongoing value creation and chemicals growth strategy.

The latest proposal envisions OMV injecting about EUR1.7bn of cash into the merged entity to ensure its stake is equal to ADNOC’s. The two companies are still negotiating the combined firm’s listing venue and headquarters location.

The combining of the two businesses would let Borealis tap cheap feedstock and new growth markets while bringing Borouge technical expertise, according to a Bloomberg report.

Read: UAE’s ADNOC bumps up decarbonisation budget to $23bn