ADNOC secures 50% stake in OCI’s Fertiglobe for $3.6 billion

(Bloomberg) — Abu Dhabi National Oil Co. agreed to purchase a 50% stake in the fertilizer unit of European chemical producer OCI NV for $3.6 billion.

ADNOC’s shareholding in Fertiglobe Plc will increase to 86.2% after the transaction, which is expected to close in 2024, OCI said in a statement on Friday. The purchase price of 3.20 dirham (87 cents) per share represents a 25% premium to Fertiglobe’s initial public offering price, OCI said.  

OCI’s shares sank as much as 13% in Amsterdam, the biggest drop since April, and have fallen almost 40% this year.

Bloomberg reported earlier this week that ADNOC was exploring a potential takeover of OCI or its significant assets as part of its latest push to expand beyond crude. State-owned oil producers in the Middle East are expanding in chemicals, an industry poised for long-term growth, while demand for crude is expected to decline amid the energy transition. 

ADNOC and OCI combined their Middle East and North Africa crop-nutrient businesses in 2019 to form Fertiglobe, 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%.

Fertiglobe’s free float traded on the Abu Dhabi Securities Exchange will remain at 13.8% after the transaction.

OCI 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.

Ubben’s San Francisco-based Inclusive Capital owns 5% of OCI. It also holds a stake in Fertiglobe.