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In a strategic move to deepen its presence in the chemicals industry, Abu Dhabi National Oil Co (ADNOC) has announced its agreement to acquire European chemical producer OCI’s entire stake in ammonia and urea producer Fertiglobe for a substantial $3.62 billion. This transaction marks another milestone for the Abu Dhabi state oil giant as it solidifies its position in the chemicals sector, rendering ADNOC the majority shareholder in Fertiglobe.
According to a joint statement issued by ADNOC and OCI on Friday, 15th December, the acquisition will raise ADNOC’s shareholding to 86.2%, leaving 13.8% available for trading on the Abu Dhabi Securities Exchange (ADX). The terms of the agreement stipulate that ADNOC will purchase OCI’s 50% + 1 share stake in Fertiglobe at a rate of 3.20 dirhams per share, reflecting a total purchase price of 13.28 billion dirhams.
Fertiglobe, headquartered in Abu Dhabi, was established in 2019 through a collaboration between OCI, backed by Egyptian billionaire Nassef Sawiris, and ADNOC, combining their ammonia and urea assets. Khaled Salmeen, Executive Director of the Downstream, Marketing & Trading Directorate at ADNOC, expressed that this significant transaction aligns with ADNOC’s ambitious chemicals growth strategy and accelerates its plan to create a global growth platform for ammonia and clean ammonia.
The joint statement also outlined additional components of the agreement, including an earn-out mechanism for 2024 and 2025. This mechanism is linked to commodity pricing and the free cash flow performance of the Fertiglobe business during the specified period.
The deal is anticipated to conclude in 2024, subject to legal and regulatory conditions, including obtaining anti-trust approvals. The announcement had an immediate impact on Euronext-listed OCI’s shares, which fell by as much as 15% in late afternoon trading.
ADNOC’s recent spate of mergers and acquisitions demonstrates a concerted effort to diversify its portfolio and tap into new revenue streams. In the past year, the company acquired stakes in Australian oil and gas group OMV and European petrochemical firm Borealis from the Abu Dhabi sovereign wealth fund Mubadala Investment Company. Moreover, ADNOC is reportedly finalizing a deal with OMV to merge Borouge and Borealis, a move that would create a chemicals giant.