By Alexandra Schwarz-Goerlich VIENNA, March 31 (Reuters) - Giant new plastics group Borouge International represents a major step towards increased profitability, Alfred Stern, the CEO of Austria's
OMV CEO: Borouge International Merger to Drive Profits, IPO Set for 2027
Borouge International Merger and Future Prospects
By Alexandra Schwarz-Goerlich
Formation and Strategic Importance
VIENNA, March 31 (Reuters) - Giant new plastics group Borouge International represents a major step towards increased profitability, Alfred Stern, the CEO of Austria's OMV, told Reuters, adding a listing was expected in 2027.
The group, whose completion was announced on Tuesday, was formed through the combination of ADNOC and OMV's subsidiaries alongside the acquisition of NOVA Chemicals. It is expected to achieve above‑average margins and stronger price premiums compared with the wider market, Stern said.
Production and Pricing Advantages
Around 70% of production is based on low-cost raw materials, while premium products achieve price premiums of around 18% on average, Stern said.
Financial Performance and Outlook
Earnings Already High and Expected to Rise
Based on the existing companies, the combined Borouge International would have achieved an earnings before interest, tax, depreciation and amortisation margin of around 25% over the last five years.
The profits of Austrian oil, gas and chemicals group OMV beat market expectations when it reported earlier this year, boosted by its chemicals arm.
Dividend Policy and Balance Sheet Strategy
To launch Borouge International with a strong balance sheet and a solid investment-grade rating, OMV and ADNOC had said they will forgo half of their dividend in 2026.
Stern said this would not alter OMV's fundamental dividend policy.
IPO Timeline and Listing Plans
IPO Delay and Rationale
Initially, the plan was to float Borouge International this month, around the time the company's creation was completed. The company denied a direct link between the delay and the conflict in the Middle East, saying it was a matter of choosing the best date for shareholders.
Stern said the company was now targeting an initial public offering in 2027 through a three-stage process.
Share Exchange and Listing Details
Existing Borouge shares will be exchanged, then they will be listed in Abu Dhabi at the same time as a capital increase to allow its inclusion in the MSCI Emerging Markets Index.
Borouge International will be headquartered in Vienna, where a secondary IPO is planned.
Synergies and Production Capacity
Expected Synergies
A press statement on Tuesday said the merger was expected to generate synergies of at least $500 million, 75% of them within the first three years, but it did not give details on how that would be achieved.
Global Production Ranking and Expansion
Borouge International will have a future annual production capacity of more than 12 million metric tons of polyolefins, placing it in fourth place globally.
This year, a further 1.4 million tons of capacity is expected to come online through the commissioning of new plants in Abu Dhabi.
(Reporting by Alexandra Schwarz-Goerlich; writing by Maria Rugamer. Editing by Olaf Brenner and Barbara Lewis)
