ADNOC Announces $3.6 Billion Investment for Stake Acquisition

In a significant development that further solidifies its position in the global chemicals market, the Abu Dhabi National Oil Company (ADNOC) has announced a $3.62 billion agreement to acquire the entire stake held by European chemical producer OCI in Fertiglobe. This move will not only allow ADNOC to become the majority shareholder in the ammonia and urea producer but also amplify its presence in the chemicals industry.

Established in 2019, Fertiglobe is an Abu Dhabi-based company that was formed as a joint venture between ADNOC and OCI. The latter received substantial support from Egyptian billionaire Nassef Sawiris, which helped merge their respective ammonia and urea assets into a single entity. As per the recent transaction, ADNOC's shareholding in the company will surge to 86.2%, leaving the remaining 13.8% as free float on the Abu Dhabi Securities Exchange (ADX).

Under the terms of this landmark deal, ADNOC is set to acquire OCI’s 50% + 1 share stake in Fertiglobe at a price of 3.20 dirhams per share. This translates into a total purchase price of approximately 13.28 billion dirhams, or about $3.62 billion.

This strategic acquisition aligns seamlessly with ADNOC's ambitious growth plans for its chemicals division. The company is determined to establish a robust global growth platform for both ammonia and clean ammonia. Khaled Salmeen, Executive Director, Downstream, Marketing and Trading Directorate at ADNOC, highlighted this vision in his statement.

In addition to the core terms, the agreement also incorporates an earn-out mechanism for 2024 and 2025. This mechanism is directly linked to commodity pricing and the free cash flow performance of Fertiglobe within that period. It's a strategic move designed to ensure the long-term profitability and sustainability of the investment.

The transaction is expected to be finalized in 2024, subject to the fulfillment of various legal and regulatory conditions, including antitrust approvals. Following the announcement of the deal, shares in Euronext-listed OCI experienced a significant drop of about 15%, reflecting the market's immediate response to the news.

This acquisition is merely one part of a broader M&A spree by ADNOC, which has been actively acquiring assets in the chemicals and gas fields. The company has been ramping up its global expansion efforts in an attempt to diversify its revenue streams and maximize earnings for the Gulf state.

In line with this aggressive growth strategy, ADNOC agreed last year to acquire stakes in Australian oil and gas group OMV and European petrochemical firm Borealis from Mubadala Investment Company, an Abu Dhabi sovereign wealth fund. These acquisitions represent a strategic move to consolidate its position in the global energy markets and further diversify its portfolio.

Furthermore, ADNOC is reportedly closing in on a deal with OMV to merge Borouge and Borealis, thereby creating a chemical industry giant. This move underscores ADNOC's aggressive drive to expand its portfolio and assert its dominant position in the global chemicals market.

In conclusion, ADNOC's latest acquisition of OCI's stake in Fertiglobe is a strategic move that aligns with its ambitious growth plans. By consolidating its position in the chemicals industry, ADNOC is not only diversifying its portfolio but also paving the way for future growth opportunities. With this acquisition, ADNOC continues to demonstrate its commitment to becoming a global leader in the chemicals industry, leveraging strategic partnerships and investments to achieve its long-term objectives.