OMV completes US$4 bn-stake in Borealis from Mubadala

OMV completes US$4 bn-stake in Borealis from Mubadala

Vienna-headquartered OMV, the integrated oil and gas company, has completed the transaction for it to acquire an additional 39% stake in chemicals firm Borealis from Mubadala Investment Company, the Abu Dhabi-based strategic investment company, for US$4.68 billion.

As part of the deal, which was initially announced in March 2020, OMV now holds a 75% interest in Borealis and Mubadala retains a 25% interest in the company.

Musabbeh Al Kaabi, CEO, Petroleum & Petrochemicals, Mubadala, said: “This transaction is well aligned with our strategy as a responsible investor and we are confident in the value this partnership will create for all three companies.”

Mubadala’s petroleum arm owns a 24.9% stake in OMV and Al Kaabi said it is aligned with OMV’s strategy to expand its value chain and will support its growth in the chemicals space globally.

Borealis, which is also based in Vienna, currently has more than 6,800 employees and operates in more than 120 countries. The company provides services and products to customers globally, both directly and in collaboration with Borouge, a joint venture with the Abu Dhabi National Oil Company and with Baystar, a partnership with Total in Texas.

Borealis, through Borouge, is undertaking two large-scale projects in Abu Dhabi's western region of Ruwais, including the development of the world's largest mixed-feed cracker and a fifth PP unit. In 2019, Borealis generated EUR9.8 billion in worldwide sales and a net profit of EUR872 million.

Global demand for monomers and polymers is growing rapidly. The purchase of a controlling majority in Borealis makes OMV a leading provider of polyolefins and base chemicals. The joint production capacities make OMV and Borealis the number one producer of ethylene and propylene in Europe and one of the top 10 polyolefin producers worldwide. The acquisition is a strategic extension of OMV’s value chain into high value chemicals. This provides a natural hedge against the cyclicality of each value chain step with respect to both volumes and market spreads, de-risking OMV’s exposure to volatile markets.

Furthermore, OMV and Borealis will jointly expand their know-how and activities in the plastics circular economy. Borealis’ activities in plastics recycling, through its subsidiaries EcoPlast (Austria) and mtm plastics (Germany), Project STOP (Ocean Waste) and the Design For Recycling (DFR) initiative are a perfect addition to OMV’s ReOil technology for the chemical recycling of post-consumer-plastic. The proprietary ReOil technology converts hard-to-recycle plastic waste into high-quality feedstock for its refineries, substituting the need crude oil.

“This transaction is another milestone in the implementation of our strategy," Rainer Seele, chief executive of OMV, said.

OMV, which also operates an upstream concession offshore Abu Dhabi, is one of Austria’s largest-listed industrial companies with group sales of about EUR23 billion. It is active in both upstream and downstream sectors of the energy value chain with operations in Europe, the Middle East, Africa and the Asia-Pacific region. The company’s production averaged about 487,000 barrels of oil equivalent per day in 2019.

OMV also operates three refineries in Europe and owns a 15% stake in Adnoc Refining and Trading JV, with a total processing capacity of 24.9 million tonnes/year.

Mubadala, with its US$230-billion asset base spanning six continents, invests on behalf of the Abu Dhabi government. It has investments across sectors including petrochemicals, technology, aerospace, real estate and infrastructure, among others.

Last year, Mubadala invested US$50 million in US firm NextDecade Corporation's upcoming Rio Grande liquefied natural gas (LNG) facility.


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