Following a year of negotiations, Abu Dhabi’s oil company ADNOC has agreed to buy Germany’s chemicals giant Covestro in a deal worth $16.3 billion (14.7 billion euros) including debt, the German group said on Tuesday.
ADNOC will make a takeover offer at $68.86 (62.00 euros) per Covestro share, which is set to be accepted by the chemicals company.
“Subject to the review of the offer document, the Board of Management 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 around $13 billion (11.7 billion euros) and represents a premium of about 54% to the unaffected closing price on June 19, 2023, the day prior to any media coverage of a potential 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, Covestro said.
The deal would be one of the largest cash transactions in the chemicals industry ever, as well as the first time a company part of the DAX 40 blue-chip index in Germany would be acquired by a state company from the Gulf.
ADNOC, which pumps nearly all the oil in OPEC’s major producer the United Arab Emirates (UAE), has been looking to buy into 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 into concrete negotiations with Adnoc” and open its books for due diligence on a proposed deal.
Commenting on the strategic deal announced today, Sultan Ahmed Al Jaber, ADNOC Managing Director and Group CEO, said,
“This strategic partnership is a natural fit and aligns seamlessly with ADNOC’s ongoing smart growth and future proofing strategy and our vision to become a top 5 global chemicals company.”
By Tsvetana Paraskova for Oilprice.com
