fter a year of discussions, Abu Dhabi’s oil firm ADNOC has reached an agreement to acquire Germany’s chemical giant Covestro in a transaction valued at $16.3 billion (14.7 billion euros), inclusive of debt, as announced by the German company on Tuesday. ADNOC intends to present a takeover bid at $68.86 (62.00 euros) per share of Covestro, which is anticipated to be approved by the chemical manufacturer. ” Subject to the review of the offer document, the Board of Management and the Supervisory Board assume that they will recommend the acceptance of the offer to the Company’s shareholders,” stated Covestro.

The acquisition price suggests an equity valuation for Covestro of approximately $13 billion (11.7 billion euros), reflecting a premium of around 54% over the unaffected closing price on June 19, 2023, which was the day before any media reports regarding a potential transaction emerged. According to Covestro, the proposal will require a minimum acceptance threshold of 50% plus one share, along with standard closing conditions such as merger control, foreign investment control, and EU foreign subsidies clearances. This transaction would rank among the largest cash deals in the chemicals sector to date and marks the first instance of a company listed in Germany’s DAX 40 blue-chip index being acquired by a state-owned enterprise from the Gulf region. ADNOC, which is responsible for nearly all oil production in the United Arab Emirates (UAE), has been seeking to invest in the chemicals and petrochemicals sector to enhance its downstream operations.

ADNOC initially approached Covestro approximately one year ago. In June 2024, ADNOC’s extensive efforts over the past year to acquire Covestro progressed significantly when Covestro announced its decision to ” enter into concrete negotiations with ADNOC ” and to allow access to its financial records for due diligence regarding the proposed transaction. In response to the strategic partnership revealed today, Sultan Ahmed Al Jaber, ADNOC’s Managing Director and Group CEO, stated, “This strategic partnership is a natural fit and aligns seamlessly with ADNOC’s ongoing smart growth and future proofing strategy and our vision to become a top 5 global chemicals company.”

ADNOC – Covestro

Author: Dr. Arsham Ghasemi