The merger of Borealis and Borouge to form an international petrochemical giant with sales of $30 billion seems unlikely to materialize. The “Edelweiss” project, set to be finalized in September 2023, appeared promising from an industrial perspective. The deal made sense for the partially state-owned OMV, offering involvement in a broader scope.
However, the Austrians underestimated Adnoc, the state oil giant from Abu Dhabi. The previously amicable negotiations with Mubadala, the international investment company representing Abu Dhabi, took a different turn when Adnoc acquired OMV shares last year. The cultural dynamics of discussions with Adnoc were described as deep and often aggressive, causing tension and discontent among Austrian stakeholders.
The negotiation landscape has been complicated by geopolitics, such as the EU Parliament vote against removing the United Arab Emirates from the FATF Gray List. Pressure mounts on Adnoc to secure a successful deal given past failed takeover attempts. Speculation surrounds the negotiations surrounding Borealis’ valuation and Adnoc’s tough negotiation tactics. Despite uncertainties and challenges, OMV remains committed to the negotiations in the best interests of shareholders and employees.
Concerns have arisen regarding key aspects of the deal, including Austria’s protection from share dilution in the joint chemical company. OMV seeks to maintain control options but has faced obstacles due to Adnoc’s stance on this issue. Negotiations have also been complicated by regulatory hurdles and market conditions that may affect financing options for both companies.
The timeline for finalizing the merger is a priority for both OMV and Adnoc as they seek to complete it before national council elections next year. However, stakeholders brace for potential shifts in the outcome of the merger as new information comes to light or unforeseen challenges arise.
Despite these challenges, OMV continues forward with negotiations acknowledging its historical partnerships with Borealis and Borouge while exploring other options if necessary.
