Sonali Ray, writer
Brief news
- ADNOC has agreed to acquire Covestro for €14.7 billion, initiating a voluntary public takeover at €62 per share, representing a 54% premium.
- The acquisition aims to enhance ADNOC’s international strategy in the chemicals sector, positioning it among the top five players globally.
- Covestro’s CEO emphasized the unprecedented nature of this transaction between a Middle Eastern investor and a German company, highlighting the potential for sustainable growth.
Detailed news
ADNOC, the state-owned oil company of Abu Dhabi, announced on Tuesday that it has reached an agreement to acquire Covestro, a German chemicals company, for 14.7 billion euros ($16.4 billion).
Covestro announced in a statement that ADNOC, the Abu Dhabi National Oil Company, will initiate a voluntary public takeover of the company at a price of 62 euros per share. This transaction is expected to result in an equity value for Covestro of approximately 11.7 billion euros, which is a premium of approximately 54% to the company’s closing price on June 19.
As of 10:09 a.m. London time, Covestro shares were trading 3.7% higher.
In a separate statement, ADNOC disclosed that the transaction has an enterprise value of 14.7 billion euros. It further stated that the transaction is crucial to the company’s international development strategy of becoming a top-five chemicals player.
As the group CEO and managing director of ADNOC, Sultan Ahmed al-Jaber stated, “Covestro is a global leader and industrial pioneer in chemicals, bringing unmatched expertise in high-tech specialty chemicals and materials, utilizing advanced technologies such as AI.”
Polymer materials for construction and engineering procedures are manufactured by Covestro, a former unit of Bayer. Its products are employed in various sectors, including the chemical industry, telecommunications, and athletics.
ADNOC also executed an investment agreement as part of the accord, which stipulated that it would acquire 1.17 billion euros in new shares of Covestro from a capital increase.
A arrangement that is unprecedented
On Tuesday, Covestro CEO Markus Steilemann explained to CNBC’s “Street Signs Europe” that the agreement was reached after “intensive” and “very constructive” discussions between the two parties.
“To the best of my knowledge, this is the most significant potential transaction between a strategic investor from the Middle East and a German DAX-listed company.” “This is unprecedented, which implies that we prioritize quality over time,” stated Steilemann.
The challenges that the global and German chemicals sector has been confronting were acknowledged by Steilemann, who is also the president of the German Chemical Industry Association. He acknowledged that these headwinds will not dissipate now that the company has a new owner.
“I believe that we can expedite the implementation of our sustainable future strategy in all economic conditions with a more robust partner. Consequently, I am both excited and exhausted that we have achieved this milestone,” the CEO reported to CNBC.
In June, the German materials behemoth disclosed its financial records to ADNOC in response to speculation regarding a potential acquisition. In order to diversify its portfolio, ADNOC has been seeking to expand its presence in the chemicals sector.
The UAE oil behemoth acquired a 24.9% stake in Austrian chemicals firm OMV earlier this year. ADNOC acquired OCI’s stake in Fertiglobe for $3.62 billion at the conclusion of 2023, thereby becoming the majority shareholder in the ammonia producer.
In a note released on Tuesday, analysts at Jefferies stated that they anticipate minimal antitrust and regulatory risks associated with the transaction, as a result of the “limited operational overlap.”8
Covestro’s management and supervisory board anticipate that they will endorse the transaction to the company’s shareholders, contingent upon an offer review.
Source : CNBC News
