IPIC and OMV finalise deal to buy 50% of Borealis

The Abu Dhabi-based International Petroleum Investment Company (IPIC) and OMV, Central Europe's leading oil and gas group, have finalised the purchase of 50 per cent of Borealis in a deal worth 920 million euros (Dh4.103 billion). The deal was signed in late June, but the transaction did not close until this month.

"The formal signing was on June 30, 2005. On October 13, 2005, was the closing of the transaction, which means the transaction is already approved by competent authorities," a company spokesperson said. "This acquisition supports the future growth of a leading provider of innovative, value creating plastics solutions with a strong position in Europe and the Middle East. "Furthermore, the share increase in Borealis puts OMV in a better position to benefit from its own Central European operations which are integrated with Borealis, and also from Borealis excellent position in the Middle East,in view of future markets in China as well."

IPIC increased its stake from 25 per cent to 65 per cent while OMV enhanced its stake to 35 per cent from 25 per cent. "The purchase price is 920 million euros, of which OMV pays 184 million euros," the spokesperson added.

Borealis' operations with the Abu Dhabi National Oil Company (Adnoc) in Abu Dhabi under the name Borouge are in a region rich in natural resources and are of strategic value due to their proximity to the booming Chinese market, which is the world's largest plastics importer.

"With Borouge in Abu Dhabi, Borealis is optimally positioned to meet the rising demand for innovative, value creating plastic solutions in China. "Due to the competitive costs of raw materials in the Middle East, a significant portion of the plastics industry's future worldwide investment will be made in this region. Borealis recognised this trend early and is a step ahead of its competitors."

Borealis' business is also crucial to OMV's value chain. Borealis processes about 85 per cent of the petrochemicals produced by OMV and is the largest customer of OMV's refineries in Schwechat and Burghausen, Germany. This year, OMV is increasing its ethylene and propylene production in Schwechat to 900,000 tonnes per year. During the same time period, Borealis is increasing its polymer output capacity to approximately 1 million tonnes per year.