ADNOC Group Acquires Covestro for $16.35 Billion

Ending months of suspense, Covestro AG on Tuesday said that it has signed an investment agreement with certain entities of the UAE-based ADNOC Group, including ADNOC International Limited and its subsidiary, ADNOC International Germany Holding (AIGH) AG for $16.35 billion.

This price represents a premium of approximately 54% to the unaffected closing price on 19 June 2023, and a premium of 21% to the closing price on 23 June 2024, the last share price prior to Covestro announcing the beginning of the confirmatory due diligence and the start of concrete negotiations.

The agreement stipulates, among other items, that AIGH will make a public takeover offer for all outstanding shares of Covestro at a price of $68.85 per share. In addition, ADNOC International will commit itself to fully supporting the company’s “Sustainable Future” strategy.

At the same time, Covestro decided that upon completion of the transaction, the company’s share capital shall be increased by 10% (18.9 million shares) and that, at and subject to closing, the new shares shall be issued to AIGH against payment of a price per share equal to the offer price, thus, based on an offer price of €62.00 against a total amount of €1.17 billion, under simplified exclusion of subscription rights.

Covestro CEO Dr Markus Steilemann said that the agreement was in the best interest of Covestro, its employees, shareholders, and all other stakeholders.

He said that with ADNOC International’s support, Covestro will have an even stronger foundation for sustainable growth in highly attractive sectors and can make an even greater contribution to the green transformation.

“We regard ADNOC International as a financially strong and long-term oriented partner with whom we will further drive our successful “Sustainable Future” strategy in all market conditions. Our complementary growth strategies, shared commitment to advanced technologies, innovation and sustainability are key cornerstones of our partnership,” he added.

Pivotal Step

The UAE’s Minister of Industry and Advanced Technology and ADNOC Managing Director and Group CEO Dr Sultan Ahmed Al Jaber said that as a global leader and industrial pioneer in chemicals, Covestro brings unmatched expertise in high-tech specialty chemicals and materials, using advanced technologies including AI.

He said that this strategic partnership is a natural fit and aligns seamlessly with ADNOC’s ongoing smart growth and future proofing strategy and its vision to become a top 5 global chemicals company.

“It represents a pivotal step for both organisations and embodies our disciplined approach to investing in strategic assets that drive long-term value and unlock new growth opportunities, while reinforcing our commitment to diversifying ADNOC’s portfolio. Our aligned strategies uniquely position us to meet the growing global demand for energy and chemical products, while accelerating the transition to a circular economy,” he added.

Partnership enables expansion of Covestro’s excellent position in attractive growth markets

Covestro has a clear growth strategy and is already making significant progress in its strategic transformation that will further expand its excellent position in attractive growth markets. ADNOC International sees Covestro as the foundational platform of its Performance Materials and Specialty Chemicals business and is convinced of Covestro’s strategic perspective and its vision to become fully circular.

In the joint Investment Agreement, which runs until the end of 2028, Covestro, the ADNOC Group, including ADNOC International, have agreed on the main cornerstones of the partnership.

In particular, the agreement contains several obligations on the part of ADNOC International to maintain Covestro’s existing business activities, corporate governance and organisational business structure.