Abu Dhabi National Oil Co (ADNOC) has announced a significant move into the chemicals industry by acquiring OCI’s entire stake in ammonia and urea producer Fertiglobe for $3.62 billion.
This deal solidifies ADNOC’s position as the majority shareholder in Fertiglobe, with its shareholding rising to 86.2%, while 13.8% will remain in free float on the Abu Dhabi Securities Exchange (ADX).
Under the agreement, ADNOC will purchase OCI’s 50% + 1 share stake in Fertiglobe at a price of 3.20 dirhams per share, totaling 13.28 billion dirhams ($3.62 billion).
Fertiglobe, headquartered in Abu Dhabi, was established in 2019 through the combination of ammonia and urea assets from OCI, backed by Egyptian billionaire Nassef Sawiris, and ADNOC.
Khaled Salmeen, Executive Director of the Downstream, Marketing & Trading Directorate at ADNOC, expressed the significance of the transaction, stating, “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.”
In addition to the purchase, the agreement includes an earn-out mechanism for 2024 and 2025, tied to commodity pricing and the free cash flow performance of Fertiglobe during this period.
The completion of the deal is expected in 2024, subject to meeting legal and regulatory conditions, including anti-trust approvals.
The announcement had an immediate impact on Euronext-listed OCI’s shares, which fell as much as 15% during late afternoon trading.
This move is part of ADNOC’s broader mergers and acquisitions (M&A) strategy, which involves acquiring assets in the chemicals and gas sectors and expanding globally to diversify its revenue streams.
In the past year, ADNOC acquired 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 in discussions with OMV to merge Borouge and Borealis, creating a major chemicals player, and engaging in formal talks with German plastics and chemicals manufacturer Covestro.
ADNOC is determined to optimize earnings for the Gulf state through these strategic moves.