Page 33 - Plastics News March 2020

Business news

OMV and Mubadala negotiating to acquire additional 39% share in

Borealis

ustrian energy and petrochemicals major OMV share purchase agreement and an amended shareholders'
Aand Abu Dhabi's investment group Mubadala have agreement) in the ongoing negotiations, (ii) approvals by
agreed contract terms for the potential acquisition of Mubadala and (iii) other approvals by authorities (such as
an additional 39% share in Austria-based polyolefins merger control clearances).
and fertilizers producer Borealis by OMV. OMV's stake in
Borealis would rise from 36% to 75%. Under the agreement, Crude shock for Reliance
OMV would pay $4.68bn for the additional 39% stake,
and it would be entitled to all dividends in relation to Industries-Aramco deal
additional share in Borealis distributed after 31 December
2019, it said in a regulatory filing. The deal is still subject
to corporate approvals, in particular OMV supervisory he coronavirus outbreak
board approval, and other approvals by authorities, such Tand the oil price crash
as merger control clearances. are likely to impact Reliance
Industries’ plan to become a
OMV’s supervisory board has not finally deliberated and zero net debt company by the
decided on the potential transaction, but it is expected end of the next fiscal. Accordng
to make a decision “as soon as possible”, the Austrian to report in Telegraph. Amid
energy major said. OMV said earlier that raising the
stake in Borealis would expand its value chain in the soft crude oil prices and its
petrochemicals sector and allow it to fully consolidate effects being felt on other
Borealis' results into its financial statements. Mubadala downstream products, there
currently holds 64% of Borealis, which would go down to are rising concerns around Reliance Industries’ plan to
25% if the deal with OMV goes through. It also holds 24.9% of sell a 20 per cent stake in its oil-to-chemicals (O2C)
OMV, according to OMV's website.Furthermore, Mubadala business to Saudi Aramco. The proposed deal is crucial
holds 63% on Spanish energy and chemicals firm Cepsa, and for RIL to meet its target of becoming a zero net debt
it fully owns Canada-based petrochemicals company NOVA firm by March 2021. For the December quarter of 2019,
Chemicals, among other investments. Furthermore, the the net debt of RIL stood at Rs 1.53 lakh crore. While
it was initially expected that the deal will close by
March 31 this year, the joint CFO of RIL had said soon
after the third quarter results that this was unlikely
to happen. “It will not be a deal which will get done
by March 31. It’s a large cross-border transaction, a
complex transaction and so the timeline is something
we have to be realistic about,” V. Srikanth had said.
RIL has been facing hurdles to the deal with the Union
government petitioning a court in December last year
to halt the transaction. The latest drop in crude oil
prices and other related products should now add to
its worries. The fear is that the deal could either get
delayed or the company may not get the valuation
Supervisory Board of OMV has not finally deliberated and that it was initially seeking. Many are of the view
decided on the potential transaction. It is expected that a that RIL has other options as well to bring down its
respective decision is made as soon as possible. A potential debt. It had signed a deal with Brookfield for its tower
transaction is, inter alia, subject to (i) an agreement with infrastructure trust. The company could also bring in
Mubadala on the commercial transaction parameters and strategic investors to its fibre InvIT. Reliance can also
the transaction documents (consisting, in particular, of a cash on on its digital services platform.

33 March 2020 Plastics News