The United Arab Emirates' Abu Dhabi National Oil Company (Adnoc) has made its largest-ever acquisition offer, proposing a €14.7 billion deal to acquire German chemicals company Covestro. The offer of €62 per share represents a more than 50% premium on Covestro’s share price prior to negotiations. As part of the deal, Adnoc will inject an additional €1.2 billion into Covestro to support its operations. Covestro, a leader in the production of polyurethane foams and polycarbonates used in household appliances, insulation, and the automotive industry, was spun off from Bayer in 2015.
Adnoc is diversifying its business beyond crude oil production, seeking to future-proof its operations in a world with growing demand for oil-derived products, such as plastics. Covestro's expertise in polyurethane and polycarbonate products complements Adnoc's ambitions to expand in the chemicals sector. Adnoc has committed to investing $150 billion between 2023 and 2027 in various ventures, including its chemicals and gas businesses, as it positions itself for long-term growth in industries beyond oil.
While the deal requires approval from regulators in Berlin and Brussels, Adnoc is confident it will pass, as the company does not currently operate in Covestro’s key sectors. EU officials may scrutinize the transaction to ensure that Adnoc does not inject state funds that could create an unfair advantage over European competitors. Covestro's market has faced challenges, particularly due to overcapacity in the chemicals industry and weakening demand in Europe, but Adnoc sees significant global potential in the company.
Covestro’s CEO, Markus Steilemann, expressed optimism about the acquisition, noting that Adnoc’s backing would provide a stronger foundation for sustainable growth in attractive sectors and contribute to the green transformation. Adnoc has also committed to retaining Covestro’s management team and honoring existing agreements with employees, ensuring stability as the companies move forward with the deal.
