DMEA: ADNOC, OMV in talks for potential merger

Abu Dhabi National Oil Co. (ADNOC) and Austrian energy firm OMV have announced that they are currently in talks to create a new petrochemicals firm, aiming to hold equity under their existing shareholdings in Borouge and Borealis. Borouge – currently listed on the Abu Dhabi Securities Exchange – is owned by ADNOC through its 54% share, with 36% being owned by Borealis and 10% by retail and institutional investors. OMV has a 74% stake in Borealis, with the final 26% being owned by ADNOC. According to a statement, the possible merger would align with ADNOC’s ongoing value creation and chemicals growth strategy; however, the final decision regarding the merger “is subject to Borouge’s and other relevant parties’ governance processes.”

OMV had previously announced that it was shifting its attention to the Middle East in 2019, attempting to move the Austrian company towards becoming a major supplier of plastics after years of betting on Russia’s low costs for growth. At the time, the company spent around 40% of its merger and acquisitions budget – $4.5bn – on concessions in oil and gas in the region, as well as a trading joint venture (JV) with ADNOC and Italy-based Eni, and a 15% stake in ADNOC’s refining business.