A major transformation is set to take place in the global polyolefins industry as Abu Dhabi National Oil Company (ADNOC) and OMV Aktiengesellschaft (OMV) move forward with plans to establish Borouge Group International. This newly formed entity will result from the consolidation of Borouge plc and Borealis AG, alongside the planned acquisition of Nova Chemicals Corporation for $13.4 billion. Once completed, the deal will create a global polyolefins leader with a polyolefins production capacity of 13.6 million metric tons per annum (mtpa), positioning it as the fourth-largest producer globally.
The headquarters of Borouge Group International will be located in Vienna, Austria, with regional headquarters in Abu Dhabi, UAE. Additionally, the company will maintain key operational hubs in Calgary, Pittsburgh, and Singapore. ADNOC and OMV will hold equal stakes of 46.94%, exercising joint control over the new company, with the remaining shares allocated for free float. The entity will be publicly listed on the Abu Dhabi Securities Exchange (ADX), pending regulatory approvals.
What Does the Nova Chemicals Acquisition Mean for Borouge Group International?
As part of this strategic expansion, ADNOC has entered into a share purchase agreement to acquire Nova Chemicals Corporation, a major North American polyethylene producer. With a production capacity of 2.6 million metric tons of polyethylene and 4.2 million metric tons of ethylene, Nova will significantly enhance the footprint of Borouge Group International in North America. The acquisition is valued at approximately 7.5 times forward through-the-cycle EBITDA, with funding expected through capital markets.
By integrating Nova’s assets, the new global polyolefins leader will gain enhanced market access, technological expertise, and increased production capacity, positioning it for sustained growth across key global markets. The move aligns with ADNOC’s broader expansion strategy to strengthen its presence in the chemicals sector, leveraging synergies between Borouge Group International and its existing businesses.
How Will the Merger Benefit Investors and Shareholders?
The formation of Borouge Group International is projected to generate significant financial benefits for shareholders. The deal is expected to unlock $500 million in annual synergies, driven by operational efficiencies, enhanced market reach, and shared technological advancements. These cost savings and efficiency improvements will directly contribute to higher profit margins and stronger financial performance for the company.
In addition to operational synergies, the company will introduce an attractive dividend policy, with a minimum payout of 16.2 fils per share. This represents a 2% increase over Borouge’s 2024 dividend targets, providing a tangible incentive for investors. The company aims to distribute 90% of free cash flow as dividends, with potential for further increases based on financial performance.
To support its financial stability and strategic growth plans, Borouge Group International intends to raise up to $4 billion in primary capital by 2026. This move will help achieve inclusion in key market indices such as the MSCI index, while also securing an investment-grade credit rating.
What Role Will Borouge-4 Play in the Expansion Strategy?
A critical component of the growth strategy for Borouge Group International is the planned recontribution of Borouge-4, a key production facility expected to be fully integrated by the end of 2026. The cost of this expansion is estimated at $7.5 billion, and once operational, it will significantly enhance polyolefins production capacity while boosting cash flow and shareholder value.
With an estimated through-the-cycle EBITDA of approximately $900 million, Borouge-4 is poised to play a central role in supporting the company’s long-term expansion strategy. The additional production capacity will enable Borouge Group International to meet the increasing demand for high-quality polyolefins across global markets.
How Will the New Entity Drive Sustainability and Circular Economy Initiatives?
Sustainability is a core focus for Borouge Group International, which aims to become a leader in circular economy solutions. The company will build upon existing sustainability initiatives from Borouge, Borealis, and Nova to develop advanced recycling technologies and renewable materials.
Both Borouge and Borealis have previously set ambitious net-zero targets for Scope 1 and Scope 2 emissions by 2050, and the new entity will continue to prioritize environmental responsibility. With growing demand for sustainable polymers and circular solutions, Borouge Group International is well-positioned to capitalize on emerging opportunities in this space.
What Is the Expected Timeline for the Completion of the Merger?
The transaction is expected to be finalized in the first quarter of 2026, subject to regulatory approvals and other standard closing conditions. Once completed, ADNOC’s stake in Borouge Group International will be transferred to XRG, aligning with ADNOC’s broader global chemicals strategy.
With its newly expanded footprint, robust financial backing, and commitment to innovation, Borouge Group International is set to redefine the global polyolefins market. The merger will enhance ADNOC and OMV’s competitive positioning, while also delivering substantial value to investors and shareholders.
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