Introduction to the Strategic Merger

In a landmark move, Abu Dhabi National Oil Company (Adnoc) and Austria's OMV have agreed to merge their polyolefin operations, creating a $60 billion global petrochemical powerhouse. This strategic partnership will form Borouge Group International (BGI), combining Adnoc's Borouge with OMV's Borealis unit. The deal marks a significant milestone in both companies' growth strategies, solidifying Abu Dhabi's position as a leader in the chemicals sector.

Key Components of the Deal

• Joint Venture Structure: Adnoc and OMV will each hold approximately 46.94% of BGI, with the remaining 6.12% available as free float. This structure ensures both companies have substantial influence over the new entity's operations and strategic direction.

• Acquisition of Nova Chemicals: As part of the agreement, BGI will acquire Nova Chemicals Corporation from Mubadala Investment Company for $13.4 billion, including debt. This acquisition will significantly expand BGI's presence in North America, leveraging Nova's assets to enhance its market position.

• Financial Contributions: OMV will inject €1.6 billion ($1.7 billion) into the new venture. Additionally, BGI plans to raise up to $4 billion in primary capital to support its growth and achieve MSCI index inclusion.

Strategic Benefits and Market Impact

The merger is expected to generate substantial synergies, with a potential run-rate EBITDA synergy of approximately $500 million annually. This will be realized at a rate of 75% during the first three years post-closing. The strategic location of BGI's headquarters in Austria and regional headquarters in Abu Dhabi will provide global reach and market access, enabling efficient customer service across various regions.

Key Advantages of the Merger:

• Global Market Presence: Combining Borouge and Borealis will create the world's fourth-largest polyolefin producer by nameplate production capacity.
• Enhanced Competitiveness: The new entity will benefit from a diverse product portfolio and access to cost-advantaged markets.
• Innovation and Sustainability: BGI will focus on cutting-edge technologies and sustainable practices, aligning with global trends towards environmentally responsible operations.
• Financial Performance: The merger is expected to create significant value, free cash flow, and be clean CCS EPS accretive for OMV.

Quotes from Key Executives

Dr. Sultan Al Jaber, Adnoc's Managing Director and Group CEO, highlighted the deal's significance in Adnoc's global chemicals strategy, stating, "These transformative transactions mark a pivotal milestone in Adnoc's global chemicals strategy as we deliver on our international growth mandate."

Alfred Stern, OMV's CEO, noted, "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."

Conclusion

The merger between Adnoc and OMV to form Borouge Group International is a strategic move that will significantly impact the global petrochemicals market. With its expanded market access, diverse product portfolio, and commitment to innovation and sustainability, BGI is poised to become a leading player in the industry.