ADNOC and OMV's $13.4bn Acquisition of Nova Chemicals
- katerinageorgiou5
- 36 minutes ago
- 5 min read
By Zoe Thaller, Arthus Marande (ESCP); Amya Hillis, Abraham Vongkhamdy, Irene Souny Bihr, Leo Fridjhon, Janira Martinez, Christian Lippmann, Zin Nas (Columbia University)
Photo: Crystal Kwok (Unspalsh)
Overview of the deal
Acquirer: Borouge Groupe International (Joint Venture between ADNOC and OMV))
Target: Nova Chemicals Corp.
Total Transaction Size: $13.4bn
Closed Date: Q1 2026 (Expected)
Target Advisors: Morgan Stanley (Financial), No Information (Legal)
Acquirer Advisors: Barclays, Citi, Goldman Sachs, and Rothschild & Co (Financial), Freshfields Bruckhaus, Gibson Dunn & Crutcher, and Stikeman Elliott (Legal)
ADNOC (Abu Dhabi National Oil Company) and OMV (Österreichische Mineralölverwaltung) have agreed to merge their respective polyolefins businesses: Borouge and Borealis, into Borouge Group, creating a $60bn global leader in polyolefins. Polyolefins are a group of plastics derived from oil and gas that are ubiquitous in modern life. The newly formed Borouge Groupe will acquire Nova Chemicals Corp., a leading North American chemical producer. Nova Chemicals operates with an annual production capacity of 2.6 million tonnes of polyethylene—a versatile material widely used in packaging, consumer goods, and industrial applications. Additionally, the company has a 4.2 million tonne ethylene production capacity, a critical feedstock for manufacturing plastics and other products, with applications spanning agriculture and industrial processes.
This acquisition will allow ADNOC and OMV to diversify their revenue sources through their joint venture and implement a strong footprint in North America. Furthermore, the deal strengthens ADNOC and OMV's position as the rise of electric vehicles reduces oil demand. Focusing on other uses of oil and gas resources will allow Borouge to maintain its relevance in the future.
“Together, OMV and ADNOC will build on a versatile and future-proof product portfolio and pursue significant organic growth opportunities. Most importantly, today’s agreement secures material synergies and long-term sustainable value creation for OMV’s shareholders.” - Alfred Stern (CEO of OMV)
Company Details (Acquirer - Borouge Group)
Borouge is a leading petrochemical company specializing in the production of polyolefin products. As a joint venture between ADNOC and OMV, Borouge supplies diverse industries such as packaging, automotive, and infrastructure. The company is focused on providing innovative, sustainable solutions while expanding its global presence in key markets.
Founded in 1998, headquartered in Abu Dhabi, United Arab Emirates
CEO: Hazeem Sultan Al Suwaidi
Number of employees: 3,000
Market Cap: $20.8bn (as of 07/04/2025)
Enterprise Value (EV): $22.5bn
LTM Revenue: $6.0bn (2024)
LTM EBITDA: $2.4bn
LTM EV/Revenue: 3.7x
LTM EV/EBITDA: 9.4x
Company Details (Target - Nova Chemicals Corp.)
NOVA Chemicals Corp is a Canada-based company that develops and manufactures chemicals and plastic resins. The company's products include polyethylene, olefins, ethylene, polymer-grade propylene, crude butadiene, and debutanized aromatics concentrate. Its products are used in rigid and flexible packaging, containers, plastic bags, plastic pipes, electronic appliances, television consoles, building and construction materials, automotive components, housewares, and other industrial and consumer goods.
Founded in 1954, headquartered in Calgary, Alberta, Canada
CEO: Roger Kearns
Number of employees: 2,500
Market cap: Not Publicly Disclosed (Mubadala Investment Company privately holds NOVA)
Enterprise Value (EV): $13.4bn (Acquisition Valuation, March 2025)
LTM Revenue: $3.3bn (2023)
LTM EBITDA: -
LTM EV/Revenue: 4.06x
LTM EV/EBITDA: -
Projections and Assumptions
Short-Term Consequences
The acquisition of Nova Chemical Corp will allow ADNOC and OMV to expand their operations in North America. ADNOC operates in the MENA region (UAE, KSA, and Egypt). OMV's business focuses mainly on the European region. The geographical expansion will reduce exposure to local risks while increasing access to advantaged feedstock.
The acquisition will have a beneficial financial outcome for the joint venture. The Joint Venture is expected to benefit from high margins, with an estimated $500m in synergies between the various entities. This will allow Borouge Groupe to invest in the Borouge-4 project, one of the most significant industrial projects underway in the UAE and set to become the world's largest single-site polyolefin complex, expected to boost the company’s production by 1.4 million tonnes, a 28% increase in production capacity. The project is expected to generate around $900m in average annual EBITDA across the whole economic cycle once fully operational by the end of 2025. The increased size of the group will enable it to finance its various projects at a lower cost of debt. This is crucial for an industry that requires high investment to stay competitive and to finance new projects. The Borouge-4 project is estimated to cost $7.5bn.
Long-Term Upsides
The deal will allow the joint venture to lead in sustainable plastic. Integrating Nova's innovation capabilities will position Borouge as a potential global leader in bio-based and recyclable polyolefins, strengthening its position in the post-oil world. This is especially critical given that the European Parliament and Council plan to ban the production of cars with internal combustion engines by 2035. The oil and gas industry must reinvent itself to remain viable and invest in new oil uses, such as polyolefins for packaging. Offsetting potential losses from reduced fuel appears to be the direction ADNOC and OMV have chosen.
Moreover, emerging markets represent significant opportunities. Emerging countries such as Asia, Africa, and South America are developing rapidly. It is critical to capture this growth. OMV has already positioned itself in such countries. Still, with the help of ADNOC, which has access to both the Asian and African markets, and now Nova, to North America. The joint venture can expand its geographical footprint and customer base. This could be achieved through further acquisitions to absorb other players in those strategic regions, such as Asia, Latin America, and Sub-Saharan Africa. Thereby improving margins in advanced materials such as composites and high-performance polymers. The merger positions the company to compete more effectively against industry leaders and meet the growing demand for advanced materials.
Risks and Uncertainties
The ADNOC–OMV–NOVA Chemicals agreement has several risks and uncertainties regarding financials, macro trends, and joint venture compatibility. Leverage is increased by the $13.4bn transaction, which restricts capital flexibility and makes the company more sensitive to changes in interest rates. Global polyolefin pricing is still cyclical and susceptible to macroeconomic downturns, especially in North America, Europe, and China, the merged company's key markets. Margin compression may result from increased competition from low-cost producers in Asia and the U.S. Gulf Coast. Joint Venture dynamics also introduce governance, strategy alignment, and profit-sharing risks between ADNOC and OMV. Return on investment can fall short of projections if the expected growth or synergies from the combination of NOVA, OMV, and Borouge don't happen.
Regulatory and political barriers bring integration complexity and potential overvaluation. Since both firms are state-owned, the deal may attract heightened scrutiny from regulatory authorities concerned about market concentration and foreign government involvement. Integration across regions with differing management structures, corporate cultures, and governance practices presents serious execution challenges. Moreover, the risk of overestimating synergies or overpaying for assets, especially in a volatile market, could weaken financial performance. If due diligence is rushed or incomplete, hidden liabilities or misaligned asset valuations may emerge post-deal, eroding stakeholder confidence and diminishing overall merger value.
“These transformative transactions mark a pivotal milestone in ADNOC’s global chemicals strategy as we deliver on our international growth mandate.” - His Excellency Dr Sultan Ahmed Al Jaber (CEO of ADNOC)
Sources
OMV reaches agreement with ADNOC on key commercial terms for a combination of Borealis, Borouge and NOVA | OMV.com