Adnoc Weighs Takeover of $5 Billion Chemical Producer OCI
- Mideast oil giant holds preliminary talks on potential deal
- OCI also weighs divestments including sale of Iowa Fertilizer
Abu Dhabi National Oil Co. is exploring a potential takeover of European chemical producer OCI NV, in the latest push by the Middle Eastern energy giant to expand beyond crude, people familiar with the matter.
OCI and state-owned Adnoc are working with advisers and have held preliminary talks about a possible transaction, the people said, asking not to be identified because the information is private. Shares of OCI have fallen 38% in Amsterdam trading this year, giving the company a market value of about €4.4 billion ($4.8 billion).
Deliberations are ongoing, and there’s no certainty they will lead to a transaction. Adnoc could also opt to acquire significant assets from OCI instead of acquiring the entire company, some of the people said.
OCI, backed by Egyptian billionaire Nassef Sawiris, has been evaluating a range of options including asset disposals as part of a strategic review and could also engage with different suitors, the people said.
Asset Disposals
The Dutch company is working with advisers to gauge buyer interest in a US crop nutrient unit, Iowa Fertilizer Co., the people said. It’s seeking more than $3 billion for the unit, which makes nitrogen fertilizers like urea ammonium nitrate, according to the people.
A spokesperson for Adnoc declined to comment. OCI said in a statement it’s in ongoing discussions with “multiple potential buyers for certain of its nitrogen assets.”
Representatives for OCI didn’t respond to multiple queries on potential takeover interest. The Betaville blog wrote earlier about rumors that OCI could be involved in a major transaction, citing unverified market gossip.
OCI said in November it had hired advisers to explore asset monetization opportunities in an attempt to reduce its holding company discount. It said at the time it was in “active discussions” on “attractive value propositions.”
The company announced in March it would conduct a strategic review after one of its largest shareholders, activist investor Jeff Ubben, urged it to consider asset sales to unlock value. The company has also said it’s considering the Middle East and US as possible alternative listing venues, as it seeks to assuage shareholder concerns about its stock price.
Middle East Venture
Ubben’s Inclusive Capital Partners had called for OCI to explore options for its Iowa unit. The business would be of great value to pure-play fertilizer producers like Nutrien Ltd. seeking nitrogen production in the US Corn Belt, Ubben said at the time.
Adnoc and OCI already have an existing partnership in the Middle East fertilizer sector. The two companies combined their Middle East and North Africa crop-nutrient businesses in 2019 to form Fertiglobe Plc, a regional fertilizer producer to challenge U.S. and Russian exporters. Fertiglobe went public in a 2021 initial public offering, with OCI controlling 50% of the business and Adnoc owning more than 36%.
State-owned oil producers in the Middle East are expanding in chemicals, an industry poised for long-term growth even as demand for crude is expected to decline amid the energy transition. Adnoc is putting the final touches on a deal with Austria’s OMV AG to create a petrochemical firm worth more than €30 billion, Bloomberg News has reported. The oil giant is also separately working on an acquisition of German chemicals group Covestro AG.