The largest oil producer in the UAE has backed away from its offer to purchase a stake in “Braskem SA,” as the company faces obstacles in its goal to build a global chemicals business, including issues related to valuation.
“Abu Dhabi National Oil Company” (ADNOC) informed “Novonor S.A.,” the majority shareholder of “Braskem,” that it was no longer interested in continuing due diligence procedures or negotiations for acquiring the stake, according to a statement filed with the stock exchange. Braskem’s stock, the leading petrochemical company in Latin America, fell by as much as 16% on the New York Stock Exchange.
“Braskem” released the contents of the message it received from “Novonor” regarding ADNOC’s decision. “Novonor” stated that it remained fully engaged in the sale process, according to the correspondence. A spokesperson for “ADNOC” confirmed the withdrawal from the acquisition process via email.
Shift Toward Chemicals
Oil producers have long supplied chemical companies with fuels like naphtha or gases that serve as the building blocks for plastics and other materials.
Now, oil-rich nations such as Saudi Arabia and the UAE are increasingly focusing on chemicals to boost demand for their natural resources amid the energy transition.
“ADNOC” aims to develop its global chemicals business to diversify beyond crude oil production and refined products, which make up the bulk of its profits. The company is also seeking other deals, including a proposed multibillion-dollar acquisition of the German chemicals group “Covestro AG,” and a separate merger of two plastics units, which would create a business worth more than $30 billion.
So far, these discussions have also faced hurdles. The company’s plan to merge “Borouge PLC,” listed on the Abu Dhabi Securities Exchange, with “Borealis AG” has been delayed due to valuation talks with its partner “OMV” from Austria. Now, upcoming elections in the European country threaten further delays. “Covestro” is in open talks with “ADNOC,” and may be waiting for a higher bid.
