Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Abu Dhabi National Oil Company has sealed a long-awaited deal to create a $60bn global plastics company after agreeing to combine its petrochemical assets with those of Austria’s OMV.
The new company, called Borouge Group International, will specialise in polyolefins, a group of plastics derived from oil and gas that are omnipresent in modern life — appearing in everything from shopping bags and toys to automotive parts, pipes and buildings.
Adnoc and OMV said Borouge Group International, which they valued at $60bn plus, would be the fourth-largest polyolefins player.
As the world’s appetite for gasoline and diesel begins to be eroded by the rise of electric vehicles, Middle Eastern oil producers such as Adnoc are diversifying into fossil fuel-derived chemicals such as plastics.
The market for plastics is predicted to continue growing rapidly, and in October Adnoc agreed a €14.7bn takeover of German chemicals group Covestro, the leading producer of polyurethane foam that is used in household appliances and insulation.
Adnoc and OMV said they will each hold nearly 47 per cent of the shares in Borouge Group International, which will be headquartered in Austria and listed in Abu Dhabi. The remainder of the shares will be free float.
The Abu Dhabi side will also inject Nova Chemicals, a leading North American maker of polyethylene, often used in packaging, films and bottles, into the new company.
Nova, which Adnoc and OMV said had an enterprise value of $13.4bn, is currently owned by Mubadala, the United Arab Emirates’ sovereign investor. Meanwhile, OMV will inject €1.6bn of cash into Borouge Group International.
The transactions mark the culmination of on-and-off talks between Adnoc and OMV about combining their chemical divisions — which at one point were less than 24 hours away from a deal in December 2023 before negotiations stalled.
“These transformative transactions mark a pivotal milestone in Adnoc’s global chemicals strategy,” Adnoc chief executive Sultan al-Jaber said. “We will create a new industry powerhouse, with a portfolio of premium products.”
OMV had announced a framework for a deal with Adnoc in July 2023 under which the two companies would combine their chemical divisions.
OMV chief executive Alfred Stern said on Monday the deal would “support OMV’s transformation into an integrated sustainable chemicals, fuels, and energy company”.
After the deal is completed, Adnoc’s stake in Borouge Group International will be transferred to XRG, an entity created by the Abu Dhabi company last year to invest its profits abroad. Board members of XRG include former BP chief executive Bernard Looney.
