Abu Dhabi's International Petroleum Investment Company (IPIC) agreed to share ownership of its Nova Chemicals unit with the Austrian petroleum company OMV, deepening its long-standing relationship with the European firm in which it holds a 19.6 per cent stake. Under an agreement struck about a month ago, Borealis, an IPIC-OMV chemicals joint venture based in Vienna, would acquire 24.9 per cent of Nova from IPIC. The deal received regulatory clearance from the European Commission last week.
"IPIC is currently reviewing synergies between us and its other portfolio companies with the objective of creating a new global polyolefins leader," Nova said earlier this month. "In this context, IPIC and OMV have decided to share control of us similar to their successful joint ownership and control arrangements for Borealis." IPIC on July 6 acquired Nova, which has its headquarters in the US city of Pittsburgh and produces plastics and other commodity chemicals in North America and Europe, for about US$2.3 billion (Dh8.44bn) including debt. The deal came after Nova ran into financial difficulties during the global recession.
The transaction gave IPIC, which is owned by the Abu Dhabi Government, an entry to the North American petrochemicals market as well as boosting its European assets. OMV is IPIC's major partner in the European chemicals sector. Borealis is 64 per cent owned by IPIC and 36 per cent by OMV. The two firms also jointly own AMI Melamine International, an Austrian fertiliser and chemicals venture. For more than a decade, OMV has also been a partner with IPIC and the Abu Dhabi National Oil Company in Abu Dhabi's main domestic chemicals ventures.
In addition, IPIC and OMV are partners in a Pakistani oil refinery and have plans for joint ventures in oil and gas production. Now they must also jointly attend to helping Nova weather the economic slump that continues to grip much of North America and Europe. Nova's seven-member board would include four directors nominated by IPIC, two by OMV and one by Borealis. Nova had estimated its July and August revenue at $742 million, down 48 per cent from $1.42bn for the comparable period last year. "Margins have improved during 2009, but have not yet recovered to levels experienced prior to the economic slowdown that began in the fourth quarter of 2008," the company said.
@Email:tcarlisle@thenational.ae
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