OMV and ADNOC to create fourth-largest global polyolefin group

ADNOC has also entered in a share purchase agreement with Nova Chemicals Holdings GmbH, an indirectly wholly owned company of Mubadala Investment Company P.J.S.C. for 100% of Nova Chemicals for an enterprise value of US$13.4 billion. ADNOC and OMV have also agreed that upon completion of the combination, Borouge Group International will acquire Nova Chemicals, further expanding its footprint in North America.

Once fully operational, Borouge 4 is envisaged to be retransferred to Borouge Group International at the end of 2026 at cost, estimated to be approximately US$7.5 billion. When combined, the three complementary businesses will create the fourth-largest global polyolefin group with equal shareholdings by OMV and ADNOC.

The acquisition of Nova Chemicals, a North American-based polyolefin producer and a provider of advanced packaging solutions and proprietary technologies, will further strengthen Borouge Group International’s presence across the Americas and increase its exposure to advantaged feedstock. Borouge Group International will be uniquely positioned to create value and generate superior through-cycle shareholder returns, supported by synergies and a strong pipeline of organic growth projects.

Alfred Stern, Chairman of the Executive Board and CEO of OMV, said: “These landmark transactions represent a momentous step for OMV. They will accelerate our growth strategy in Chemicals and support OMV’s transformation into an integrated sustainable chemicals, fuels, and energy company. Together with ADNOC, our strategic partner of 25 years, we are creating a global polyolefins leader, exceptionally positioned for value creation by accessing the largest and most cost advantaged markets. We aim to significantly increase the sales volumes of innovative polyolefin premium products and be at the forefront of renewable and circular economy solutions. Together, OMV and ADNOC will build on a versatile and future-proof product portfolio and pursue significant organic growth opportunities. Most importantly, the agreement secures material synergies and long-term sustainable value creation for OMV’s shareholders. ADNOC and OMV have already proven that we are stronger together. We are convinced that we will unlock superior shareholder value on our joint path forward.”

His Excellency Dr Sultan Ahmed Al Jaber, ADNOC Managing Director and Group CEO, added: “These transformative transactions mark a pivotal milestone in ADNOC's global chemicals strategy as we deliver on our international growth mandate. 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."

Transactions to deliver growth and value creation

Under the terms of the transactions, Borealis and Borouge will be combined, with OMV injecting €1.6 billion in cash – to be reduced by dividends paid out until completion – into Borouge Group International to equalise shareholdings.

The NOVA Chemicals transaction will be funded through acquisition debt, which is expected to be refinanced in the capital markets. The valuation implies an Enterprise Value to EBITDA multiple of around 7.5 on the basis of an expected through-the-cycle EBITDA of US$1.8 billion.

It is envisaged that Borouge Group International will raise up to US$4 billion on the equity capital markets to achieve relevant MSCI index inclusion and augment an investment grade credit rating with a through-the-cycle net leverage target of up to 2.5 times EBITDA.

Borouge 4, the ethylene and polyethylene expansion project to Borouge’s production facilities in the UAE, will be developed outside of Borouge Group International. It is envisaged to be recontributed to Borouge Group International at the end of 2026 once fully operational, for an estimated US$7.5 billion from OMV (30% share) and ADNOC (70% share). The project is expected to provide a through-the-cycle EBITDA contribution of around US$900 million per year.

Positioned to benefit from global demand growth

The new company will benefit from significant global scale, access to low-cost feedstock, a high share of innovative and differentiated products, technical and innovation capabilities, and a unique portfolio in sustainable and recycling solutions.

On a proforma basis between 2020 and 2024, Borouge Group International would have had on average EBITDA of US$4.5 billion and an EBITDA Margin of 26%. The through-the-cycle EBITDA of the Borouge Group International is expected to grow to more than US$7 billion per year with significant contributions from existing growth projects and the extraction of synergies. It brings together three highly complementary regional leaders with more than 11 000 employees, a proforma polyolefins capacity of 12.2 million tpy and olefin capacity of 11.4 million tpy. 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.

Borouge Group International will benefit from a strong pipeline of near-term organic growth projects. It will also be able to leverage Borealis’ and Nova Chemicals’ expertise to increase its share of premium grade products in growing industries. In addition, it will leverage Borealis’ unique technology portfolio, to meet the growing market demand in key sectors. This includes Borstar^®, a unique process and catalyst technology enabling molecular design, Borlink^TM, which helps linking grids and energy sources regionally and globally, Borceed^TM, a technology needed for closing the gap between classic thermoplastic products and rubbers, as well as Borcycle^TM, a recycling technology closing the loop on plastic waste. Nova Chemicals’ technologies include the Advanced SCLAIRTECH^TM process, combining innovations in reactors and catalysts to produce premium polyethylene resin, and SYNDIGO^TM, a mechanically recycled food-contact resin for the food packaging market.

With more than 16 500 granted patents, Borouge Group International will have a competitive advantage through its leading technological expertise, innovation and R&D capabilities. Its cost advantaged feedstock position will account for approximately 70% of its production capacity.

Demand in polyolefins is expected to grow globally at a CAGR of 3.7% between 2024-2035. 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.

Equal governance rights between OMV and ADNOC

The new entity will be headquartered and domiciled in Vienna, Austria, with regional headquarters in Abu Dhabi, and listed on the Abu Dhabi Securities Exchange (ADX). It is intended that Borouge Group International will have a dual listing on the Vienna Stock Exchange (ATX) in the future. The equal shareholding structure enables joint control between OMV and ADNOC, allowing both parties to have equal decision-making rights in all strategic matters.

Borouge Group International will have a two-tier board structure with equal governance and voting rights between OMV and ADNOC. The Supervisory Board will have five representatives from OMV, five representatives from ADNOC and potentially five employee representatives according to Austrian corporate governance.

Synergies and dividend policy

Borouge Group International is expected to realise substantial annual synergies of around US$500 million run-rate EBITDA per annum, driven by improved procurement, cross-selling opportunities, optimisation and efficiencies. About 75% of the synergy potential will be realised within three years after closing.

The transaction simplifies OMV’s chemicals holdings by creating a single, direct shareholding in Borouge Group International. The new company will target an investment grade credit rating profile and have a competitive dividend policy, with a minimum total floor dividend of US$2.2 billion, based on the expected share structure at closing.

The existing dividend policy of OMV is expected to remain unchanged for 2025 and is envisaged to be reviewed for potential adjustments thereafter. The net floor dividend to OMV from Borouge Group International is expected to be around €1 billion and it is the guiding principle that OMV’s shareholders continue to benefit from the competitive returns.

Advancing OMV’s Strategy 2030

The establishment of Borouge Group International accelerates the implementation of OMV’s Strategy 2030 and its growth in Chemicals, including achieving key priorities of growing in attractive markets, with a particular focus on North America and Asia; establishing a leading position in renewable and circular economy solutions and diversifying its portfolio.

In addition to delivering immediate scale in major polyolefins markets, these transactions provide exposure to high-end markets and provides a growth platform benefiting from global demand trends and developing own organic growth projects.

OMV remains committed to combined innovation capabilities through its R&D expertise and the highly skilled workforce. The current innovation centres in Europe, including Austria, as well as the UAE will continue to be key R&D hubs. With OMV’s simplified chemicals holdings, it will preserve the industrial integration through continuing to operate its refinery integrated naphtha-based crackers in Schwechat, Austria, and Burghausen, Germany, and develop its sustainable base chemicals offering. The industrial integration and majority of the operational synergies at OMV sites in Austria and Germany will be preserved to maintain the Group’s competitive advantage.

Read the article online at: https://www.hydrocarbonengineering.com/petrochemicals/04032025/omv-and-adnoc-to-create-fourth-largest-global-polyolefin-group/