KEY POINTS
- ADNOC to acquire Covestro for €14.7 billion ($16.3 billion), including debt.
- ADNOC seeks expansion into petrochemicals and green energy.
- Deal sparks debate over foreign takeovers in German markets.
Abu Dhabi’s state-owned oil company ADNOC has agreed to acquire German chemical manufacturer Covestro in a deal worth €14.7 billion ($16.3 billion), including debt. This marks the largest foreign takeover by a Gulf state as it seeks to diversify its energy investments and reduce reliance on oil amid a global shift towards cleaner energy sources.
The deal sees ADNOC paying €62 per share and taking on an additional €3 billion in debt. Moreover, the company will purchase €1.17 billion worth of new shares in Covestro once the transaction closes. The acquisition aims to bolster ADNOC’s efforts to expand in petrochemicals, renewable energy, and gas.
Pushing growth in petrochemicals
ADNOC’s head of downstream marketing and trading, Khaled Salmeen, emphasized the company’s strategy to develop Covestro as a platform for growth. He noted, “We believe that the fundamentals of chemicals are strong and Covestro’s sector will grow faster than GDP until 2050.”
Covestro, which supplies plastics and chemicals to industries including automotive and construction, saw its shares rise by 3.7 percent to €58, the highest in three years. The German company was spun off from Bayer in 2015 and officially opened its books to ADNOC in June 2024 after months of negotiations.
Balancing autonomy and strategic control
ADNOC granted certain autonomy to Covestro, ensuring it will not sell, close, or significantly reduce the company’s operations. Covestro will continue to maintain control over its business activities, and its supervisory board will retain labor representation as required by German law. Two members of the board’s shareholder representatives will remain independent of ADNOC, safeguarding the company’s interests.
Covestro CEO Markus Steilemann expressed optimism, describing the acquisition as a move that will “not only keep Covestro on a growth path but also move it to the fast lane.” According to Reuters, the deal also follows a trend of increased interest from Middle Eastern investors in Europe, where valuations are often more favorable compared to the U.S.
Despite the takeover, ADNOC pledged to maintain the company’s business integrity, including protecting its technology and intellectual property. However, the acquisition will likely trigger discussions in Germany about the rise in foreign takeovers of key industries amidst a challenging economic environment.
The acquisition marks the second-largest takeover by a Middle Eastern company after Teva Pharmaceuticals’ $40 billion acquisition of Allergan’s generic drugs division in 2015. Also, the deal highlights ADNOC’s expansionist strategy amid several failed attempts by Gulf investors to acquire international firms this year.
