OCI NV, ADNOC create JV combining their Middle East Fertilizers Businesses
M&A WATCH- Tie-up between OCI NV and ADNOC will create the largest fertilizer producer in MENA: Abu Dhabi National Oil Company (ADNOC) has agreed to merge its fertilizers business into OCI NV’s nitrogen fertilizers production platform in the Middle East and North Africa, creating the largest export-focused nitrogen fertilizer platform globally and the largest producer in the MENA region, OCI NV said in a statement (pdf). The new Abu Dhabi-based entity will have a production capacity of 5 mn tonnes of urea and 1.5 mn tonnes of ammonia. Annual revenues for the combined entity are USD 1.74 bn, based on 2018 pro forma figures. OCI will own 58% of the JV and ADNOC 42%. The transaction is expected to close in 3Q2019, subject to legal and regulatory conditions.
So what assets are merging, exactly? OCI’s MENA assets include Egyptian Fertilizer Company (EFC), a 60% stake in Egypt Basic Industries Corporation (EBIC), a 51% stake in Sorfert in Algeria and a global trading platform based in the UAE. ADNOC Fertilizers operates two plants in Ruwais in the UAE.
OCI boss Nassef Sawiris will also become CEO of the new entity, while UAE Minister of State and CEO of ADNOC Sultan Ahmed Al Jaber will be chairman.
Advisors: J.P. Morgan acted as financial advisor and Cleary Gottlieb Steen & Hamilton LLP as legal counsel to OCI NV. Citi acted as financial advisor and Shearman & Sterling as legal counsel to ADNOC.