OMV Plans Divestments to Fund Borealis Buy
OMV will implement a divestment program, synergies and active cash flow management to support its purchase of a 39% stake in leading polymers producer Borealis from Mubadala Investment.
The Abu Dhabi wealth fund will retain its direct 25% interest in Borealis along with its existing 24.9% shareholding in OMV.
The deal, which was signed on Mar. 12, will turn the Austrian group into a global oil, gas and chemicals player, whose integrated business model extends from the wellhead to high-quality plastic and repositions the group for a low carbon future, said Rainer Seele, CEO and chairman of the OMV executive board
Seele added that the transaction represents the biggest transformation in the company’s history that OMV one of the top 10 polymer producers worldwide, with joint production capacities also making it the number one producer of ethylene and propylene in Europe.
Along with the transaction, OMV is planning a divestment program of €2 billion until the end of 2021 as well as synergies of €700 million until the end of 2025 from reduced costs, streamlined operations and tax benefits.
The Vienna-headquartered group said it will also optimize its cash outflows by postponing or re-evaluating already planned projects and will cut planned organic investments by €200 million to €2.2 billion this year. Investment plans for the next years will also be “scrutinized critically.”
As a consequence of increasing its stake in Borealis to 75%, OMV will consolidate the 40% share Borealis holds in Borouge and its 50% share in Baystar, the joint venture with Total in Texas, USA.
Borealis also has several activities in plastics recycling, including EcoPlast in Austria, MTM Plastics in Germany, Project STOP (ocean waste) and Design for Recycling. OMV said these are a perfect addition to its ReOil technology for the chemical recycling of post-consumer plastic to synthetic crude.
The company also announced on Mar. 12, that it had started the sales process for potentially divesting its filling station business, which comprises 287 stations in southern Germany with a focus on Bavaria and Baden-Württemberg. OMV also intends to open exclusive negotiations to sell its 51% stake in Gas Connect Austria to electricity company Verbund.
