Covestro Intensifies Negotiations with ADNOC Following Improved $12.5 Billion Takeover Bid

This is an increase from the prior offer of 60 euros per share, as reported by sources familiar with the discussions to Reuters.

Germany’s Covestro announced on Monday that it is intensifying discussions with ADNOC after the Emirati energy company raised its takeover bid to 11.7 billion euros ($12.5 billion).

Covestro, a producer of plastics and chemicals for construction and engineering, stated it is now sharing its financial records with ADNOC and believes both parties could reach a mutual agreement on essential aspects of the potential transaction, including support for Covestro’s growth strategy.

Previously described as open-ended, the talks will now transition to “concrete negotiations,” with Covestro set to provide Abu Dhabi National Oil Co with due diligence information following a revised offer of 62 euros per share.

This is an increase from the prior offer of 60 euros per share, as reported by sources familiar with the discussions to Reuters.

Covestro’s shares rose by 6% to 54.3 euros at 1356 GMT following the announcement.

“We welcome the fact that Covestro is now negotiating with ADNOC,” commented Arne Rautenberg, a fund manager at Union Investment, one of Covestro’s top-10 shareholders according to LSEG data.

“But from an investor’s point of view, there is still room for improvement regarding the 62 euros-per-share offer price.”

The negotiations have been ongoing for over a year. ADNOC’s initial informal offer surfaced in June 2023, but formal talks with Covestro did not commence until September.

“We look forward to jointly working with Covestro to swiftly progress due diligence for this important transaction,” an ADNOC spokesperson stated, noting that this was their final offer.

Jefferies analysts suggested that the lengthy discussions indicate significant progress on many issues.

In response to these developments, Covestro has postponed its capital markets day, originally scheduled for June 27.

ADNOC has been actively pursuing multiple European targets. It has engaged in discussions with Austria’s OMV to form a chemical giant with annual sales exceeding $20 billion.

Additionally, in December, ADNOC agreed to acquire OCI’s stake in Fertiglobe, a European chemical producer, for $3.6 billion.

Reuters reported in April that ADNOC had also considered purchasing Britain’s BP at one point.