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Mubadala and OMV seal $4.68b Borealis stake deal

Issac John /Dubai
issacjohn@khaleejtimes.com Filed on October 30, 2020 | Last updated on October 30, 2020 at 02.53 am
OMV now holds a 75 per cent interest in Borealis and the UAE wealth fund retains a 25 per cent interest in the company. — Wam

OMV is entitled to all dividends in relation to the additional shares in Borealis distributed after December 31, 2019.

Mubadala Investment Company, the Abu Dhabi-based strategic investment company, on Thursday completed the transaction for Vienna-based oil and gas company OMV to acquire for $4.68 billion an additional 39 per cent stake in Borealis, , a leading global chemicals company, from Mubadala.

Following the initial agreement announced in March this year, the transaction was completed in line with the expected timeline and in accordance with all regulatory requirements, the two companies said in a statement.

The Austrian oil major OMV now holds a 75 per cent interest in Borealis and the UAE wealth fund retains a 25 per cent interest in the company.

As per the deal, OMV is entitled to all dividends in relation to the additional shares in Borealis distributed after December 31, 2019. “OMV will fully consolidate the results of Borealis in its financial statements.”

In 2019, Borealis generated total sales of EUR 9.8 billion and a net profit of EUR 872 million. The operating cash flow of Borealis – including dividends from its joint venture Borouge –amounted to EUR 1.5 billion in 2019. In the first nine months of 2020, Borealis achieved an operating cash flow including Borouge dividends of EUR 1.1 billion, 6.0 per cent higher than the same period of last year, despite the difficult market environment due to the Covid-19 pandemic.

Musabbeh Al Kaabi, CEO, Petroleum & Petrochemicals, Mubadala Investment Company, said the transaction is well aligned with the company’s strategy as a responsible investor. “We are confident in the value this partnership will create for all three companies. Both OMV and Borealis are champions of the Mubadala portfolio, and this decision is consistent with our asset management model and our commitment to partner with like-minded players.”

The Abu Dhabi-based state fund Mubadala’s $232 billion portfolio spans six continents with interests in multiple sectors and asset classes.

Rainer Seele, chairman of the OMV executive Board and CEO, said the transaction is another milestone in the implementation of our strategy. “We are thus establishing an integrated and sustainable business model extending OMV’s value chain towards higher value chemical products and recycling, thereby repositioning the Group for a lower carbon future.”

According to the statement, the purchase price of the transaction amounts to $ 4.68 billion. Based on closing adjustments, the cash-out for OMV, net of cash acquired, is EUR 3.8 billion.

The adjustments include the first quarter dividends to which OMV is entitled based on the increased shareholding, currency effects, and the cash position of Borealis at closing. Following the successful issuance of senior and hybrid bonds of EUR 4.5 billion Euros, OMV paid the entire amount in full at closing.

With its head office in Vienna, Borealis currently has more than 6,800 employees and operates in over 120 countries. “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,” said the statement.

— issacjohn@khaleejtimes.com

author

Issac John

Editorial Director of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.





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