Abu Dhabi and Austria’s OMV AG are in discussions about potentially merging Borouge Plc and Borealis AG to form a chemicals and plastics giant valued over $30 billion, according to sources who wish to remain anonymous. The stakeholders are in the process of discussing the possible valuation and ownership structure for the merged company, and may finalize the main points for formal merger discussions in the upcoming weeks.
Borealis, based in Vienna, is primarily owned by OMV (75%), with the rest of the shares held by Abu Dhabi National Oil Co. Borouge, which is listed on Abu Dhabi’s stock exchange, is a joint venture between Adnoc and Borealis and is valued around $22 billion.
The combined value of Borealis and Borouge, after factoring in potential synergies, could surpass $30 billion. However, the exact valuation and ownership structure are significant challenges that need to be resolved before any agreement can be reached.
The potential transaction aligns with the broader strategy of the United Arab Emirates to attract investments, foster technological advancements, and build new industries. The merger could also establish a formidable competitor against chemical industry rivals.
Negotiations between the Abu Dhabi energy group and OMV are still underway regarding their respective stakes in the merged company. Under one scenario, both parties might end up owning similar stakes less than 50%, with the remaining shares being publicly traded. However, Adnoc may acquire a slightly larger share.
The Austrian side would prefer to maintain the headquarters in Europe, even if the merged company is listed in Abu Dhabi. Both Adnoc and OMV declined to comment on the matter, and spokespersons for Borealis and Borouge directed inquiries to their owners.
The proposed merger would grant the companies a significant competitive edge, simplify the ownership structure, and provide more flexibility to expand and invest in Asia, a region with an increasing demand for chemicals and plastics. However, given the multiple stakeholders involved, including governments, a final agreement is not guaranteed.
The potential deal arrives at a critical moment for OMV, who is transitioning from a leading fossil-fuel company in Eastern Europe to a green enterprise focusing on chemicals, recycling, and electric-vehicle infrastructure. Adnoc, which accounts for most of the oil production in the OPEC member United Arab Emirates, plans to invest $150 billion to expand production capacity for crude, natural gas, and chemicals, and is also investing in low-carbon energy.
