A merger of two companies can be a headache; a merger of two countries even more so. The state-owned Abu Dhabi National Oil Company (ADNOC) and $15 billion OMV , 32% held by the Austrian state, are in talks to merge the two petrochemical companies they cross-hold, Borouge and Borealis, into an entity that would be worth over $30 billion. The complex ownership structure and the involvement of two governments make it intriguing to see who holds the whip hand.
and Borealis, into an entity that would be worth over $30 billion. The complex ownership structure and the involvement of two governments make it intriguing to see who holds the whip hand.
Strategically, it all makes sense. Goldman Sachs analysts estimate the combined group will annually produce 8.8 million tonnes of polyolefin, used to make plastics that surround power transmission cables connecting wind farms, and also to shield medical devices like inhalers. Borealis makes the chemical particles which Borouge processes into plastic products.
The headscratcher is who controls the group. OMV would need to inject more than $3 billion to hike its stake from 45% to above 50%. Yet ADNOC may not want that. The combined group would face a dilemma over where it lists - a dual listing in both countries is possible but costly, and the group would have to cater to two regulatory regimes.
The deal, if realised, would include a merger of petrochemicals group Borealis - which is owned by OMV and ADNOC in a 75:25 split - and Abu Dhabi-listed Borouge, which is 54% owned by ADNOC and 36% by Borealis.
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