Adnoc entity Borouge shares spike on talks of possible Austrian merger
Abu Dhabi-listed Borouge stock up 2 pct on reports of planned merger with Borealis AG
Dubai: Abu Dhabi-listed shares of Borouge Plc opened up 2 per cent on Tuesday as investors cheered a news report of equally merging the Abu Dhabi-based company with Austria's Borealis AG and possibly set up a major $30 billion petrochemicals conglomerate.
The stock of Borouge, which is an established joint venture partnership between Abu Dhabi National Oil Co. (Adnoc) and Borealis, traded at Dh2.58 on Tuesday morning, up from its prior day closing price of Dh2.53. By merging the companies, Borealis taps new growth markets, while bringing in Borouge's technical expertise.
Parent companies Adnoc and Austria's OMV AG are putting the final touches on the planned merger of their units Borouge Plc with Borealis AG, people with knowledge of the matter told Bloomberg. The Monday report also added that officials could possibly reach a deal as soon as mid-November.
Equal partnership agreement
OMV owns 75 per cent of Borealis, with the remainder held by ADNOC, while Borouge is a partnership between Adnoc and Borealis. The deal could value Borealis at just above $10 billion while Borouge may be valued at nearly $20 billion, in line with its current market value, the people told Bloomberg.
The latest proposal targets OMV injecting about $1.7 billion of cash into the joint company to ensure its stake is equal to Adnoc's, the sources told Bloomberg, wihe parties are still negotiating the combined firm's listing venue and headquarters location.
One possibility would have it based in Austria with a listing in Abu Dhabi, though the Austrian side has been pushing for a listing in Vienna at some point, some of the sources told Bloomberg. Details of the transaction are still being discussed and could change, the people added, asking not to be identified because the information is private.
Investors cheer merger move
Similar to how shares of Borouge turned positive on the report, shares of OMV too jumped as much as 5.6 per cent on Monday, the biggest intraday gain in four months, giving the company a market value of about $13.9 billion.
Indicative of share movements, investors are widely expected to increasingly appreciate the move, given that it is in line with Adnoc being on the lookout for deals to develop the company's own downstream and renewable energy operations.
By setting itself up against the likes of Saudi Aramco's Sabic chemical unit, the oil major has also separately been working on acquiring another chemicals group, German-based Covestro AG.