Abu Dhabi's ADNOC to acquire Dutch-listed OCI’s stake in Fertiglobe for $3.62 bln

ADNOC's M&A spree has seen it scooping up assets in chemicals and gas fields and stepping up its global expansion in a concerted push to find new revenue streams to maximise earnings for the Gulf state. It agreed last year to acquire stakes in Australian oil and gas group OMV and European petrochemical firm Borealis from Abu Dhabi sovereign wealth fund Mubadala Investment Company.

Abu Dhabi National Oil Co (ADNOC) has agreed to buy European chemical producer OCI's entire stake in ammonia and urea producer Fertiglobe for $3.62 billion. The transaction is the latest in a string of deals by the Abu Dhabi state oil giant as it deepens its foray into the chemicals business and will make it the majority shareholder in Fertiglobe.

ADNOC's shareholding will increase to 86.2%, with 13.8% remaining in free float on the Abu Dhabi Securities Exchange (ADX), ADNOC and OCI said in a joint statement on Friday. Under the terms of the agreement, ADNOC will purchase OCI's 50% + 1 share stake in Fertiglobe at a price of 3.20 dirhams per share, representing a total purchase price of 13.28 billion dirhams ($3.62 billion).

Headquartered in Abu Dhabi, Fertiglobe was formed in 2019 after OCI, backed by Egyptian billionaire Nassef Sawiris, and ADNOC combined their ammonia and urea assets. "This important transaction supports ADNOC's ambitious chemicals growth strategy and accelerates our plan to establish a global growth platform for ammonia and clean ammonia," Khaled Salmeen, Executive Director, Downstream, Marketing & Trading Directorate at ADNOC was quoted as saying.

ADNOC and OCI said the agreement also "incorporates an earn-out mechanism for 2024 and 2025, linked to commodity pricing and the free cash flow performance of the Fertiglobe business during the relevant period". The deal is expected to close in 2024, subject to legal and regulatory conditions including anti-trust approvals.

Shares in Euronext-listed OCI fell as much as 15% in late afternoon trading after the deal was announced. ADNOC's M&A spree has seen it scooping up assets in chemicals and gas fields and stepping up its global expansion in a concerted push to find new revenue streams to maximise earnings for the Gulf state.

It agreed last year to acquire stakes in Australian oil and gas group OMV and European petrochemical firm Borealis from Abu Dhabi sovereign wealth fund Mubadala Investment Company. It is also closing in on a deal with OMV to combine Borouge and Borealis to create a chemicals giant, Reuters reported on Thursday citing two people with knowledge of the talks, and is in formal talks with German plastics and chemicals maker Covestro.

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