Chemicals merger shaky

There is a crisis between OMV and its Abu Dhabis

According to insiders, the billion-euro chemicals merger between OMV subsidiary Borealis and the Abu Dhabi company Borouge - which would create one of the largest chemicals players in the world from scratch - is shaky. Failure would have negative consequences for OMV.

Question: Is it possible to negotiate too hard and too cautiously at the same time? The answer: You can. At least the OMV negotiating delegation, which has been discussing and planning the largest industrial deal in domestic economic history for several months, years in total. The negotiating partner, or alternatively opponent, is not just anyone. The project name of the potential mega-merger is both catchy and comical: "Edelweiss".

OMV and the Abu Dhabi-based state holding company Adnoc are actually negotiating a joint venture between the Adnoc chemicals division, the larger company Borouge, and the OMV subsidiary Borealis. The result would be one of the largest chemical players in the world. 

Pay billions to be on an equal footing?
It was tough from the start, whether it was about real shares, voting rights or a detailed set of rules for the Arab owners. In the meantime, the amount that OMV would have to pay to be on an equal footing is said to have increased significantly. The "Kurier" newspaper even quoted three billion euros, which OMV sources deny. OMV CFO Reinhard Florey is negotiating on behalf of Austria, but has hit a snag with Adnoc manager Khaled Salmeen.

The two gentlemen are not otherwise on friendly terms: Florey is on the Executive Board, Salmeen sits alongside Khaled Al Zaabi, CFO of Abu Dhabi National Oil Company, as Adnoc's owner representative on the OMV Supervisory Board. The internally named Abu Dhabi co-owners hold 24.9 percent of OMV.

Rumors of the imminent departure of the OMV chemicals board member
Historically, there has never been harmony on the OMV Supervisory Board, but recently things have been getting tougher: the imminent departure of the comparatively new OMV Chemicals Board member Daniela Vlad due to a lack of depth of expertise is already being reported in the media.

In Austria's most financially powerful snake pit, this is considered a new low. From the very beginning, the old OMV managers had resisted the partial abandonment of the classic oil business and the reorientation towards chemicals, with the Borealis marriage as the highlight. The very defensive CEO Alfred Stern was never able to eliminate the internal ricochets 100 percent.

Should the merger of the chemical giants fail, it would not only be a huge missed opportunity for Austria's first company, but also a rift between OMV owners such as the Republic, thousands of shareholders, the sovereign wealth fund and the Sultan family in the Emirates.