Abu Dhabi - Mubasher: Borouge PLC , listed on the Abu Dhabi Securities Exchange, announced the latest developments in the agreement between Abu Dhabi National Oil Company (ADNOC) and OMV Aktiengesellschaft on the terms of a binding framework agreement regarding the proposed merger between Borouge PLC and Borealis AG to establish the international Borouge Group with a value exceeding AED 220 billion, and its acquisition of Nova Chemicals .

Under the terms of the deal, ADNOC and OMV will each own 46.94 percent of the Borouge International Group, with joint control and equal partnership, according to a press release.

While the remaining 6.12 percent will be in the form of free shares, after obtaining the approval of both the Securities and Commodities Authority and assuming that all current free shareholders in Borouge accept the offer to exchange their current shares in Borouge for shares in Borouge International Group .

Under the proposed deal, OMV is expected to inject an initial cash amount of up to AED 6.1 billion (EUR 1.6 billion) into Borouge International Group, which will be listed on the Abu Dhabi Securities Exchange, assuming the approval of the Securities and Exchange Authority .

The amount will be reduced upon completion of the transaction in accordance with the review of the value of the financial rights in Borouge and Borealis after the completion of the expected dividend distribution process. The proposed transactions are expected to be completed in the first quarter of 2026, after fulfilling the necessary conditions and approvals from the relevant authorities .

Borouge International Group will acquire Nova Chemicals for AED 49.2 billion ($13.4 billion), including debt, to expand its presence in North America. The acquisition is expected to make the group the fourth-largest polyolefin company in the world by production capacity .

A key element of the agreement is an agreement between ADNOC and OMV to re-contribute the Borouge 4 expansion project, estimated at AED 27.5 billion ($7.5 billion). The re-contribution is expected to occur once Borouge 4 is fully operational by the end of 2026. Upon completion, the project will increase production capacity by 1.4 million tonnes per annum with expected annual earnings before interest, taxes, depreciation and amortization of approximately AED 3.3 billion ($900 million) over the cycle .

Key highlights of the proposed transaction announced by ADNOC and OMV include the establishment of a global polyolefins platform with a strong presence and wide reach. The proposed transactions will create the fourth largest polyolefins company in the world in terms of production capacity, which will reach 13.6 million tons per annum.

Including the Borouge 4 expansion project, the new joint entity will feature large-scale production capabilities and a marketing and sales network covering all major markets .

Following the merger, Borouge International Group will acquire Nova Chemicals, a leading polyethylene producer in North America with a production capacity of 2.6 million tons of polyethylene and 4.2 million tons of ethylene, further strengthening its global presence through a wide-ranging presence in North America .

A significant increase in gross earnings before interest, taxes, depreciation and amortization is expected, assuming medium-term market conditions, the commissioning of capacity expansion projects such as Borouge 4, Kalo and ACT2, and the realization of operational and commercial integration returns of up to AED 1.8 billion (USD 500 million) .

Supported by stronger cash flow generation, Borouge International Group’s dividend policy will be based on a payout ratio of 90% with the possibility of adding bonuses to the distributions based on free cash flow.

This is in order to maintain a minimum annual dividend distribution of 16.2 fils per share, which represents a 2% increase compared to Borouge’s targeted dividend distribution per share for the full year 2024 .

ADNOC and OMV have agreed to return the Borouge 4 project contribution upon completion in late 2026, at an estimated cost of AED 27.5 billion ($7.5 billion), with expected annual EBITDA of approximately AED 3.3 billion ($900 million) upon completion .

Innovation and advanced technology are at the core of the strategies of Borouge, Borealis and NOVA Chemicals. The Borouge International Group, with the three companies, includes more than 800 R&D experts, over 16,500 patents and seven world-class innovation centres, which will contribute to having more distinctive and broader capabilities to deliver higher value products .

The new group's profit margin profile is expected to remain best in class globally, be resilient over the market cycle compared to other companies in the sector, and provide the financial strength to fund future growth opportunities .

The proposed transactions are expected to create significant value for shareholders by facilitating access to global markets through the production, procurement and operations development network, achieving operational and commercial synergies, enhancing access to global markets, accelerating the dissemination of new innovations, and sharing and developing advanced technology.

With the potential to achieve an expected value from the integration of the businesses, as announced by both ADNOC and OMV, which may reach AED 1.8 billion (USD 500 million) annually, and 75% of it is expected to be achieved within 3 years of the completion of the deals .

The Borouge International Group is set to have its headquarters in Vienna, with a regional headquarters in Abu Dhabi, after obtaining the necessary relevant regulatory approvals. The Group will also maintain its main headquarters in Calgary (Alberta, Canada), Pittsburgh (Pennsylvania, USA) and Singapore .

The final transaction will be subject to a comprehensive review by the Board of Directors of Borouge PLC and any other relevant parties .