Talks over a planned $30 billion merger between the chemicals arms of Abu Dhabi National Oil Company and Austria?s OMV Aktiengesellschaft (WBAG:OMV) have stalled over recent weeks, putting at risk a complicated deal to create a new market leader. The negotiations have cooled to allow both sides to navigate a series of disagreements, according to three people familiar with the matter. Currently the groups have gone ?pencils down?, one person said.

At one point in mid-December, Adnoc and OMV, an energy and chemicals group, had been less than 24 hours away from announcing a deal, even having practice runs of analyst presentations to unveil the agreement, they added. The issues outstanding range from the trivial, such as the name of the merged unit in the final deal announcement, to the more serious, the people said. However, it is still possible that talks will resume and a deal will eventually be reached, the people cautioned.

Discussions have been on and off in the past, they added. OMV said: ?We are in ongoing and open-ended negotiations and cannot comment further.? Adnoc declined to comment.

At the heart of the matter is the complexity of the transaction and the cross-shareholdings between the companies? chemicals arms. The deal envisions combining OMV-controlled Borealis AG with Adnoc-controlled Borouge plc (ADX:BOROUGE). OMV owns a 75% stake in unlisted Borealis with the remainder held by Adnoc.

Borouge, which is listed, is 54% owned by Adnoc with 36% held by Borealis. It has a market value of about $20 billion. One element holding up talks has been a December 2022 agreement by Adnoc to buy a stake of nearly 25% in OMV from the Abu Dhabi state fund, Mubadala Investment Company PJSC.

While that deal is going through final regulatory approvals, clearance has taken longer than expected and that has also held up an eventual Borouge-Borealis combination, one of the people said. Both companies are specialists in polyolefins, which are often used to make plastics and other products. Under a framework announced in July to combine Borealis and Borouge, OMV said the aim would be to become ?equal partners under a jointly controlled, listed platform for potential growth acquisitions?.

The sides have been looking to create a new market leader and unite their cross-held entities, combining expertise across Europe and the Middle East. However, Borealis?s performance has underwhelmed recently while OMV also has less cash for acquisitions than Adnoc. This could make maintaining an equal partnership in the future more challenging when the combined group seeks further dealmaking, the people said.

Another issue previously in the way of reaching an agreement has been valuing the unlisted Borealis, which could be worth about $10 billion. Its majority owner Vienna-listed OMV trades at an equity valuation of nearly ?14 billion. The talks between Adnoc and OMV are among a number that the state-owned Middle Eastern oil group is pursuing as it seeks to diversify its revenues by pushing deeper into the petrochemical sector.