ADNOC acquires Germany-based chemical manufacturer, Covestro

Abu Dhabi’s ADNOC has finalized an agreement to purchase German chemical producer Covestro for €14.7 billion ($16.3 billion), including debt, making it the company’s largest acquisition to date. This acquisition is among the biggest foreign investments by a Gulf state as these countries work to reduce reliance on oil and embrace cleaner energy alternatives. The deal, valued at €62 per share, includes ADNOC taking on roughly €3 billion in Covestro’s debt.

This acquisition is part of ADNOC’s broader strategy to expand its footprint in petrochemicals, natural gas, and renewable energy. To support Covestro's financial stability, ADNOC will also invest €1.17 billion by acquiring new shares in the company. ADNOC believes the chemicals sector will experience significant growth, surpassing global economic growth projections through 2050.

Covestro, originally spun off from Bayer in 2015, entered into discussions with ADNOC after the energy company expressed interest in June, following initial talks reported a year earlier. The takeover requires approval from Covestro’s shareholders, with a minimum acceptance condition of 50% plus one share.

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While the acquisition is seen as positive for both Covestro and its investors, it could spark discussions in Germany about the impact of foreign takeovers of major domestic companies, especially given the current economic landscape. ADNOC has, however, agreed to maintain some level of autonomy for Covestro, with labor representatives retaining half of the seats on the supervisory board and two shareholder representatives remaining independent of ADNOC.