Abu Dhabi National Oil has reached an agreement to buy chemical producer Covestro for around 11.7 billion eurosin what constitutes the largest acquisition of a European company in the Middle East. Adnoc and Covestro said the deal would value the German company at 62 euros per share, but would depend on the Abu Dhabi oil producer securing at least 50% plus one share under its public purchase offer. Adnoc will also subscribe to a capital increase which will give Covestro approximately 1 billion euros of new capital.
The price represents a premium of approximately 11% to Monday’s closing price, as well as a premium of 54% regarding Covestro’s closing price on June 19, 2023, the last full day of trading before Bloomberg News revealed Adnoc’s initial direction.
Adnoc CEO Sultan Al Jaber is seeking deals around the world and has in recent months acquired stakes in gas projects in the United States and Mozambique.. Chemicals play an important role in this dynamicas the company predicts that growth in products used to make goods such as plastics will continue to increase in coming decades, while the energy transition will likely slow demand for oil.
“As a global leader and industrial pioneer in the field of chemicals, Covestro brings unrivaled expertise in high-tech materials and specialty chemicals, using advanced technologies including artificial intelligence,” said Sultan Ahmed al-Jaber, group CEO and CEO of Adnoc. Jefferies analysts say the former Bayer unit will have no problem making the deal happen, as they believe regulatory and antitrust risks are limited because the two companies have “limited operational overlap.”
