The merger of Borealis and Borouge to form an international petrochemical giant with sales of $30 billion seems unlikely to materialize. While the “Edelweiss” project, set to be finalized in September 2023, appeared promising from an industrial perspective, concerns have arisen regarding key aspects of the deal.
OMV, a partially state-owned Austrian energy company, negotiated with Mubadala, an international investment company representing Abu Dhabi. However, the previously amicable negotiations 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 Austrians underestimated Adnoc’s determination and tough negotiation tactics. Concerns have been raised about the valuation of Borealis and Borouge and 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.
The negotiations have been further complicated by geopolitics, including 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 negotiation tactics. Despite uncertainties and challenges, OMV remains committed to the negotiations in the best interests of shareholders and employees.
The timeline for finalizing the merger is a priority for both governments involved in order to avoid delays before national council elections that are scheduled for later this year. However, stakeholders brace for potential shifts in the outcome of the merger as negotiations evolve and geopolitical tensions continue to impact them.
In summary, while there are significant challenges facing both companies involved in this merger process, it remains possible that they may still reach an agreement that benefits all parties involved.