The United Arab Emirates’ (UAE) state-owned energy company, Abu Dhabi National Oil Company (Adnoc), and Austria’s top oil and gas company, OMV AG, have reached an agreement to create a chemical giant valued at over $60 billion. This new venture marks a significant step in both companies’ strategies to enhance their positions in the chemicals sector, which they believe will see continued growth as the energy transition progresses.
The deal will involve the merger of Adnoc’s Borouge Plc and OMV’s Borealis AG. In addition to this, the two companies will jointly acquire Nova Chemicals from Abu Dhabi’s sovereign wealth fund, Mubadala Investment Co., for $13.4 billion, including debt. The announcement was made by Adnoc in a recent statement, confirming that the merger follows nearly two years of negotiations.
A Growing Presence in the Chemical Industry
This agreement is part of Adnoc’s broader push to strengthen its presence in the chemical industry. The company made headlines in 2024 when it acquired German chemical company Covestro AG for nearly $13 billion, marking the largest Middle Eastern acquisition of a European firm at that time. By expanding in chemicals, Adnoc aims not only to secure stable demand for its crude oil and natural gas but also to capitalize on the growing global need for chemical products such as plastics, despite the challenges posed by climate change and the global shift towards cleaner energy sources.
Adnoc’s CEO, Sultan Al Jaber, expressed confidence in the new venture, stating, “We will create a new industry powerhouse,” adding that the combined entity would meet the increasing global demand for chemicals while driving value creation for stakeholders.
The Merger and Ownership Structure
The two companies, Adnoc and OMV, have agreed that each will hold a 47% stake in the new entity, which will be named Borouge Group International. The company will be listed on the Abu Dhabi stock exchange and headquartered in Austria. OMV has committed to injecting €1.6 billion ($1.7 billion) into the joint venture, with plans for a future listing in Vienna.
This merger is the result of months of discussions, with some delays due to disputes over financial contributions and the location of the company’s headquarters. Additionally, political delays in Austria, particularly regarding the government’s approval of such a large deal, had added to the complexity. The formation of the new entity comes after Christian Stocker was appointed Chancellor of Austria following lengthy coalition negotiations.
The Future of the Venture
The new entity plans to pursue significant organic growth opportunities. While further details on potential acquisitions were not disclosed, the focus will initially be on integrating Nova Chemicals into the portfolio. Notably, OMV and Adnoc will not participate in a future equity increase of $4 billion, which is expected to finance the Nova Chemicals deal.
The creation of Borouge Group International underscores the increasing importance of the chemical sector to both Adnoc and OMV. As global demand for chemical products continues to rise, particularly in industries like plastics, both companies are positioning themselves to capitalize on this growth, ensuring long-term business sustainability while contributing to the ongoing energy transition.
This merger is set to reshape the chemical landscape, bringing together two leading oil companies with complementary strengths in the sector, and positioning the new entity as a global powerhouse in the industry.
