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Adnoc-Covestro deal decision due in May

2 April 2025

EU antitrust regulators are expected to decide by 12 May whether to clear or extend the review of Abu Dhabi National Oil Company's (Adnoc) €15.9bn ($17.1bn) takeover of German chemicals producer Covestro.

The 27-country EU competition enforcer can either clear the deal with or without conditions, or open a four-month investigation after its preliminary review, a Reuters report said, citing a filing on the European Commission's website.

It was reported in October last year that Adnoc International, the overseas business arm of Adnoc Group, had signed an investment agreement Covestro in which it made a takeover offer of €14.7bn.

Adnoc International said at the time that it will launch a voluntary public takeover of €62 ($69) a share, which implies an equity value for Covestro of about €11.7bn and represents a premium of about 54% to Covestro’s closing price on 19 June, the day before the first media coverage regarding a potential transaction.

Leverkusen-headquartered Covestro’s supervisory and management boards supported the takeover offer.

In addition, Adnoc International will subscribe to a 10% non-preemptive capital increase of €1.17bn in Covestro at the closing of the transaction.

The offer will be subject to a minimum acceptance level of 50% plus one share and customary closing conditions, including merger control, foreign investment control and EU foreign subsidies clearances, the companies said.

The agreement between Adnoc International and Covestro, which runs until the end of 2028, contains several obligations on the part of the Abu Dhabi energy producer, including maintaining Covestro’s existing business activities, corporate governance and organisational business structure.

Adnoc approached Covestro about a potential takeover in September 2023, but initial advances were rejected, leading the Abu Dhabi state enterprise to raise the value of its offer.

Adnoc’s initial approaches included a takeover price of €55 and then €57 a share, Bloomberg News reported at the time.

Covestro’s expertise lies in chemicals recycling, which is key for the future of the energy industry and a target area for Adnoc.

Russia's invasion of Ukraine in 2022 slashed deliveries of natural gas to Germany, resulting in a crisis that gripped the German chemicals industry, which accounts for about 5% of the country’s GDP.

Precedent

In September, the European Commission approved the takeover of the telecommunications assets of Czech investment group PPF by UAE telecoms group e&.

Sovereign wealth fund Emirates Investment Authority holds a 60% stake in e&. The commission's review concluded that the “subsidies received by e& did not lead to actual or potential negative effects on competition in the acquisition process”.

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Jennifer Aguinaldo

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