UAE oil giant ADNOC to buy chemicals firm Covestro in $16bn deal

After a year of negotiations, Abu Dhabi oil company ADNOC has agreed to buy German chemicals giant Covestro in a deal worth $16.3 billion (€14.7 billion), including debt, the German group announced on Tuesday.

ADNOC will make a takeover offer at $68.86 (€62.00) per Covestro share, subject to acceptance by the chemicals company.

“Subject to the review of the offer document, the Board of Directors and the Supervisory Board assume that they will recommend the acceptance of the offer to the Company’s shareholders,” Covestro said.

The purchase price implies an equity value for Covestro of approximately $13 billion (€11.7 billion) and represents a premium of approximately 54% to the unaffected closing price on June 19, 2023, one day before any mediating a potential transaction.

The offer will be subject to a minimum acceptance level of 50 percent plus one share and customary closing conditions, including merger control, foreign investment control and EU foreign subsidy authorization, Covestro said.

The deal would be one of the largest cash deals in the chemicals industry ever, and the first time a company in Germany’s DAX 40 blue-chip index has been acquired by a Gulf state company.

ADNOC, which pumps almost all the oil from OPEC’s top producer the United Arab Emirates (UAE), has been looking to buy chemicals and petrochemicals to diversify its downstream portfolio.

ADNOC first approached Covestro a year ago.

In June 2024, ADNOC’s year-long efforts to acquire Covestro moved a step closer to a successful conclusion after Covestro said it had decided to “enter concrete negotiations with Adnoc” and open its books for due diligence on a proposed agreement.

Commenting on the strategic agreement announced today, Sultan Ahmed Al Jaber, Managing Director and CEO of ADNOC Group, said:

“This strategic partnership is a natural fit and aligns perfectly with ADNOC’s continued smart growth and future-proofing strategy and our vision to become a top 5 global chemicals company.”

By Tsvetana Paraskova for Oilprice.com

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