ADNOC to Acquire German Chemicals Firm Covestro for $16.4 Billion

Abu Dhabi's ADNOC, the state-owned oil giant, has agreed to acquire German chemicals firm Covestro for 14.7 billion euros ($16.4 billion). The deal, a 62 euros-per-share takeover, offers a 54% premium over Covestro's June 19 closing price. Covestro, a former Bayer unit, specializes in polymer materials used in construction, engineering, and various industries.

ADNOC's acquisition aims to bolster its international growth strategy, positioning itself as a top-five chemicals player. The deal also includes ADNOC's commitment to buy 1.17 billion euros worth of new Covestro shares.

Covestro CEO Markus Steilemann described the deal as "unprecedented," marking the largest transaction between a Middle Eastern strategic investor and a German DAX-listed company. Despite global and German chemical sector challenges, Steilemann believes ADNOC's backing will accelerate Covestro's sustainable future strategy.

ADNOC has been expanding its chemicals portfolio, recently acquiring a stake in Austrian firm OMV and becoming a majority shareholder in ammonia producer Fertiglobe. Analysts at Jefferies anticipate minimal antitrust and regulatory hurdles due to limited operational overlap. Covestro's management and supervisory board are expected to recommend the transaction to shareholders, pending an offer review.