Germany’s Covestro has announced that it is engaging in intensified talks with the UAE’s Adnoc after the energy major made an improved takeover bid of €11.7 billion, marking the culmination of over a year of pursuit by Adnoc. Covestro, renowned for manufacturing plastics and chemicals used in construction and engineering, has agreed to open its books to Adnoc, showing confidence in the potential for a mutually beneficial transaction that aligns with Covestro’s growth strategy. The offered price per share by Adnoc has been increased to €62, up from €60 based on previous discussions.
As the talks progress from an open-ended structure to more concrete negotiations, Covestro has expressed willingness to provide due diligence information to Adnoc swiftly following the improved offer. The market responded positively to the news, with Covestro’s shares rising by 6 percent. However, some investors still believe that there is room for further negotiation on the offered price per share. The journey towards this point has been a lengthy one, with initial informal offers from Adnoc being reported back in June 2023 and formal talks commencing only in September of last year.
The announcement of these escalated talks has led to the postponement of Covestro’s capital markets day originally scheduled for June 27. Adnoc, on the other hand, sees this as a final offer and is looking forward to advancing with due diligence for the transaction. Moreover, the length of the negotiation period suggests that significant progress has likely been made on various issues, according to analysts. Adnoc has been actively pursuing European targets, engaging in talks with companies like Austria’s OMV for a potential partnership to create a chemicals giant with combined annual sales exceeding $20 billion.
In addition to Covestro, Adnoc has also recently acquired European chemical producer OCI’s stake in Fertiglobe, a producer of ammonia and urea, for $3.6 billion. Reports have also indicated that Adnoc had considered acquiring Britain’s BP at one point. These moves are part of Adnoc’s strategy to expand its presence in the European chemicals market and strengthen its position as a key player in the industry. By pursuing partnerships and acquisitions with established companies like Covestro, Adnoc aims to leverage its resources and capabilities to drive growth and innovation in the chemicals sector. As negotiations progress between Covestro and Adnoc, the outcome of this potential acquisition could have far-reaching implications for both companies and the broader chemicals industry landscape.
