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OMV and Mubadala complete Borealis transaction

October 29/2020

MOSCOW (MRC) -- OMV, the international integrated oil and gas company headquartered in Vienna and Mubadala Investment Company, the Abu Dhabi-based strategic investment company, have today completed the transaction for OMV to acquire an additional 39% stake in Borealis, a leading, global chemicals company, from Mubadala, said the companies.

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. OMV now holds a 75% interest in Borealis and Mubadala retains a 25% interest in the company.

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 bn and a net profit of EUR 872 mn. The operating cash flow of Borealis including dividends from its joint venture Borouge amounted to EUR 1.5 bn in 2019. In the first nine months of 2020, Borealis achieved an operating cash flow including Borouge dividends of EUR 1.1 bn, 6 percent 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: 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. 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."

Rainer Seele, Chairman of the OMV Executive Board and CEO: This transaction is another milestone in the implementation of our strategy. We are thus establishing an integrated and sustainable business model extending OMVs value chain towards higher value chemical products and recycling, thereby repositioning the Group for a lower carbon future."

The purchase price of the transaction amounts to USD 4.68 bn. Based on closing adjustments, the cash-out for OMV, net of cash acquired, is EUR 3.8 bn. 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 bn Euros, OMV paid the entire amount in full at closing. As a result of the synergies identified in the last few months, OMV is increasing the synergy potential from EUR 700 mn to more than EUR 800 mn. In addition, OMV has successfully started its divestment program, which will realize EUR 2 bn by the end of 2021. The sale of the 51-percent share in OMVs gas logistics subsidiary Gas Connect Austria has already been signed and will have a deleveraging effect of EUR 570 million for OMV.

With its head office in Vienna, Borealis currently has more than 6,800 employees and operates in over 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 (ADNOC) and with Baystar, a joint venture with Total in Texas, USA.

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 OMVs 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 OMVs 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 OMVs 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.

Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.

OMV produces and markets oil and gas, innovative energy and high-end petrochemical solutions in a responsible way. With Group sales of EUR 23 bn and a workforce of around 20,000 employees in 2019, OMV Aktiengesellschaft is one of Austrias largest listed industrial companies.

Mubadala Investment Company is a sovereign investor managing a global portfolio, aimed at generating sustainable financial returns for the Government of Abu Dhabi. Mubadalas USD232 billion (AED 853 billion) portfolio spans six continents with interests in multiple sectors and asset classes. We leverage our deep sectoral expertise and long-standing partnerships to actively source deals. In the UAE, we are driving sustainable growth by optimizing scale and efficiency, supporting the continued diversification and global integration of the local economy while growing our shareholder value. Headquartered in Abu Dhabi, Mubadala has offices in London, Rio de Janeiro, Moscow, New York, San Francisco and Beijing.


mrcplast.com
Author:Anna Larionova
Tags:PP, PE, ethylene, propylene, Borealis, OMV.
Category:General News
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