ADNOC Takes Over Fertiglobe With $3.6b Stake Acquisition From OCI

Wedoany.com Report-Oct 21,Abu Dhabi National Oil Co. (ADNOC) is consolidating its ammonia operations after completing the takeover of its joint venture Fertiglobe PLC, a global fertilizer major, from OCI Global for AED 13.28 billion ($3.6 billion).

ADNOC has raised its stake to 86.2 percent with the 50-percent-plus-one-share acquisition from Amsterdam-based OCI. The other equity of 13.8 percent remains on free float on the Abu Dhabi Securities Exchange.

“Fertiglobe is the world’s largest seaborne exporter of urea and ammonia combined, exporting to 53 countries with a ~10 percent collective market share of global trade in these products”, ADNOC said in a statement. “The acquisition represents another significant milestone in ADNOC’s ambitious chemicals growth strategy, the expansion of its low-carbon fuels business, and supports its goal to become a top five global chemicals player”.

Early this month ADNOC secured a deal to potentially take over German chemicals producer Covestro AG with a share acquisition offer of about EUR 11.7 billion ($12.7 billion).

ADNOC is now putting all its ammonia portfolio, including two projects at home, under Fertiglobe. “On a consolidated basis, the two projects in Abu Dhabi would add ~2 mtpa [million tons per annum], more than doubling Fertiglobe’s current merchant ammonia capacity of 1.6 mtpa and increasing its total sellable capacity to 8.6 mtpa of net ammonia and urea combined, in addition to other announced global projects”, ADNOC said.

According to the announcement of the agreement December 2023, ADNOC and OCI also agreed to explore cooperation in ammonia imports to Europe and project development in the United States.

“ADNOC’s majority shareholding in Fertiglobe marks another milestone in the delivery of our ambitious international chemicals growth strategy and goal to become a top five chemicals player”, ADNOC managing director and chief executive Sultan Ahmed Al Jaber said.

Fertiglobe’s management team are staying, with Ahmed El-Hoshy stepping down from OCI to continue as Fertiglobe chief executive.

“Fertiglobe will continue to grow its low-carbon fuels business following its success in the recent H2Global bid where it secured €397 million [$430.9 million] of renewable ammonia offtake to Europe at a delivered price of €1,000 [$1,085.3] per ton until 2033 in a first-of-its-kind contract globally”, ADNOC said. “The limited capital expenditure requirements for this project lead to attractive returns for the company.

“Robust double-digit IRRs for all future growth projects will be the minimum target for the company as it seeks disciplined and value accretive growth to capitalize on the expected global growth in low-carbon ammonia demand to 24 million tons by 2032, from close to zero now.

“Expected market tailwinds from increasing applications for low-carbon ammonia will see demand growth exceed supply growth by an estimated 11 million tons up to 2032, according to industry consultants. ADNOC aims to capture 5 percent of the global low-carbon hydrogen market by 2030 in support of the UAE’s National Hydrogen Strategy”.

ADNOC and OCI launched Fertiglobe 2019. The joint venture debuted on the local exchange 2021.