ADNOC makes new $13b takeover bid for German giant Covestro

Plastics-maker seperately confirmed accepting new 62 euro/share takeover bid from ADNOC

Abu Dhabi: ADNOC entered an investment agreement with Covestro, one of the world's leading chemical players, which launched a voluntary public takeover offer to all shareholders for a cash consideration of Dh254 (62 euros) per share.

German chemicals group Covestro separately confirmed Tuesday it had accepted a takeover bid from ADNOC, valuing the plastics-maker at 12 billion euros ($13.3 billion).

This landmark agreement marks a step-change in ADNOC's international growth strategy as the company delivers on its international expansion with a focus on gas, LNG, chemicals and low carbon energies, aligned with its Board-mandated strategy.

Subject to successful completion of the transaction, this acquisition will support ADNOC's goal to become a top five global chemicals player. Covestro's specialty chemicals business complements ADNOC's chemicals growth strategy. Covestro would become the foundational platform for ADNOC's performance materials and specialty chemicals business and will further drive diversification of ADNOC's chemical portfolio.

Dr. Sultan Ahmed Al Jaber, Minister of Industry and Advanced Technology, ADNOC Managing Director and Group CEO, said, "As a global leader and industrial pioneer in chemicals, Covestro brings unmatched expertise in high-tech specialty chemicals and materials, using advanced technologies including AI.

"This strategic partnership is a natural fit and aligns seamlessly with ADNOC's ongoing smart growth and future proofing strategy and our vision to become a top five global chemicals company. It represents a pivotal step for both organisations and embodies our disciplined approach to investing in strategic assets that drive long-term value and unlock new growth opportunities, while reinforcing our commitment to diversifying ADNOC's portfolio."

Growing demand

Petrochemical demand is expected to increase by a compound 2 per cent between 2024 and 2050. It is expected that the chemicals market will double by 2050, yielding attractive economic returns.

Covestro products will accelerate the integration of AI into our daily lives, for example by developing films for head mounted displays and virtual reality (VR) devices and leveraging digital technologies like data science, machine learning, deep learning and AI to accelerate and broaden its R&D activities and projects. From iPhones cases to the lighter weight materials used in cars, Covestro materials are present all around us.

Dr. Markus Steilemann, CEO of Covestro, said, "We are convinced that the agreement reached today with ADNOC International is in the best interest of Covestro, our employees, our shareholders, and all other stakeholders. 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.

"We regard ADNOC International as a financially strong and long-term oriented partner with whom we will further drive our successful Sustainable Future strategy in all market conditions. Our complementary growth strategies, shared commitment to advanced technologies, innovation and sustainability are key cornerstones of our partnership."

Covestro originates from the industrial heartland of Germany and is a major producer of polyurethanes, polycarbonates and performance materials required for critical industrial applications. It operates globally and generates more than half of its revenues from the Asia-Pacific and North America.

The positive long-term outlook for chemicals makes Covestro an attractive investment for ADNOC. The company has industry-leading facilities and technologies and is led by an outstanding management team.

The takeover offer will be subject to a minimum acceptance threshold of 50% plus one share of Covestro's issued share capital, and customary regulatory approvals.