ADNOC and Covestro in Talks Over $15.47 Billion Investment Deal

 Germany-based Covestro AG, the world’s leading manufacturer of high-quality polymer materials and their components, on Monday said that based on the open-ended talks held with Abu Dhabi National Oil Company (ADNOC) so far, it has decided to negotiate with ADNOC for a potential deal and conclusion of an investment agreement.

As per the view of Board of Management, the discussions so far have shown that Covestro and ADNOC can generally reach a common understanding regarding core aspects of a possible transaction including support for Covestro’s further growth strategy.

Starting point for the negotiations is a possible offer price of $66.61 per share of Covestro that ADNOC has indicated to Covestro, which is subject, among other things, to the results of the confirmatory due diligence and agreement on the content of an investment agreement.

According to a report in Financial Times, the deal is said to be valued around $15.47 billion that would make it Europe’s biggest takeover this year, the largest cash-deal in the chemical industry and the first big takeover of a Dax 40 company by a Gulf state.

Dax 40 is a German blue-chip stock market index comprising the 40 biggest companies – by market capitalization and liquidity, which are trading on the Frankfurt Stock Exchange (FSE).

“For ADNOC, the $66.61-a-share deal — a premium of nearly 60% on the German group’s share price last June before news of the initial talks — is part of a five-year, $150 billion plan to transform itself from a traditional state-owned oil company into an international energy giant, the report added.

Talks in Good Progress

In a statement, Covestro CEO Markus Steilemann said that they have made good progress in their discussions with ADNOC and therefore have decided to enter into concrete transaction negotiations with the UAE’s state-owned firm.

ADNOC and Covestro both intend to proceed with the negotiations about a potential transaction and the confirmatory due diligence in a timely manner. At this time, there is no certainty whether the upcoming negotiations will lead to an agreement. There is also no certainty as to the final terms of any such agreement.

Any potential transaction would, in addition to mutual agreement on the commercial and legal transaction parameters, among other things, be subject to the approval of the respective boards of the parties and clearance by the competent authorities.

In light of these recent developments, the Capital Markets Day scheduled for 27 June 2024, will be postponed until further notice.

With its innovative products, processes and methods, Covestro helps enhance sustainability and the quality of life in many areas. The company supplies customers around the world in key industries such as mobility, building and living, as well as the electrical and electronics sector. In addition, polymers from Covestro are also used in sectors such as sports and leisure, telecommunications and health, as well as in the chemical industry itself.