ADNOC to acquire Germany’s Covestro for €11.7 billion

In a significant development for the chemical industry, Covestro AG has entered into a pivotal Investment Agreement with ADNOC and its subsidiary, ADNOC International Germany Holding AG. As part of the deal, ADNOC International has launched a public takeover offer, proposing to acquire all outstanding Covestro shares at a price of €62.00 (US$68.75) per share, a premium of 54% over Covestro’s unaffected share price before media coverage of the potential transaction.

The takeover offer values Covestro at approximately €11.7 billion and underscores ADNOC's commitment to Covestro’s long-term strategic growth, particularly its "Sustainable Future" strategy, which emphasizes sustainable innovation and circular economy principles.

The investment agreement defines the framework for a long-term partnership, with ADNOC committing to support Covestro’s strategic goals. This includes maintaining Covestro's current governance structure and corporate strategy, ensuring continuity in the company’s management and operations. ADNOC International has also agreed to subscribe to new Covestro shares, through a capital increase of 10%, at the offer price of €62.00 per share, generating approximately €1.17 billion in proceeds for Covestro. These funds will further enable the company to drive its sustainability-focused strategy.

Dr. Markus Steilemann, CEO of Covestro, expressed confidence in the partnership, stating, "With ADNOC International's support, we will have an even stronger foundation for sustainable growth in highly attractive sectors and can make an even greater contribution to the green transformation."

ADNOC Managing Director and CEO, His Excellency Dr. Sultan Ahmed Al Jaber, added, "This strategic partnership is a natural fit and aligns seamlessly with ADNOC’s vision to become a top 5 global chemicals company. It represents a pivotal step for both organizations, meeting global demand for energy and chemical products while accelerating the transition to a circular economy."

ADNOC’s offer price of €62.00 per share reflects a significant premium, representing a 21% increase over Covestro’s share price as of June 23, 2024, when negotiations began. The offer is contingent upon a minimum acceptance level of 50% plus one share, along with customary regulatory approvals.

The agreement also reassures stakeholders that Covestro’s operational structure will remain intact, with no planned sales, closures, or significant reductions in business activities. Furthermore, ADNOC has committed to preserving Covestro’s existing works agreements and governance frameworks.

This strategic alliance will enable Covestro to continue its growth trajectory in key markets, especially in high-tech specialty chemicals. Covestro’s expertise, combined with ADNOC’s backing, is expected to solidify its position as a leader in sustainable materials and advanced technologies, including artificial intelligence.

The Boards of Management and Supervisory Board of Covestro have endorsed the offer, and once the takeover document is published, they are expected to recommend shareholders accept the bid.

With ADNOC’s support, Covestro is set to expand its leadership in driving sustainability and innovation, positioning itself as a key player in the future of the global chemicals industry.