TLDR:
ADNOC eyes European chemical market
Shareholders offered 62 euros per share
Fertiglobe to spearhead green ammonia
ABU DHABI (The Thursday Times) — Abu Dhabi’s state-owned oil company, ADNOC, has formally launched a takeover offer for Covestro AG, a leading German chemicals manufacturer, in a high-stakes bid valued at €14.7 billion. Approved by Germany’s Federal Financial Supervisory Authority, the move marks ADNOC’s latest venture into Europe’s industrial landscape. Under the offer, Covestro shareholders are invited to tender shares at €62 each, a substantial premium above its pre-rumour trading price. As ADNOC expands its footprint into European chemical markets, its broader focus aligns with global low-carbon ambitions via its Fertiglobe platform. Fertiglobe, ADNOC’s joint venture with OCI, will drive the production of low-carbon ammonia to support ADNOC’s evolving role in sustainable energy.
UAE’s energy pivot towards European markets
ADNOC’s ambitions signal a notable shift for the UAE’s energy sector, which traditionally centres on oil and gas production. This acquisition signals its first substantial foray into Germany’s chemical manufacturing industry, positioning ADNOC as a significant stakeholder in Covestro’s operations and reflecting broader UAE goals to diversify energy strategies across Europe.
Covestro’s shareholders have until late November to decide on the offer. With ADNOC’s proposed €62 per share price—a nearly 54% premium on Covestro’s unaffected closing price in June—the offer provides a compelling opportunity for shareholders, with ADNOC betting heavily on Covestro’s long-term prospects in chemical production.
Fertiglobe’s new role in low-carbon ammonia production
Fertiglobe, ADNOC’s low-carbon ammonia platform co-owned with OCI, represents the UAE’s strengthened commitment to sustainability initiatives. Through this joint venture, ADNOC aims to increase its presence in sustainable energy markets globally. As ammonia-based fuels and low-carbon chemicals gain traction, ADNOC’s Fertiglobe provides the critical infrastructure to expand low-emission energy resources, particularly in Europe, aligning with global climate targets.
Minimum acceptance threshold and financial strategy
ADNOC’s bid hinges on meeting a 50% acceptance threshold and purchasing an additional €1.17 billion in Covestro shares through a capital increase. This financing strategy not only boosts Covestro’s operational capital but also enables ADNOC to manage the company’s debt burden, signalling ADNOC’s commitment to sustainable growth in European energy and materials markets. If the offer garners sufficient support, ADNOC’s equity stake in Covestro will enable new synergies between ADNOC’s Fertiglobe and Covestro’s established product lines.
From Bayer’s plastics division to chemical market giant
Covestro’s history as Bayer’s former plastics arm, which became publicly traded in 2015, brings a diversified product range to ADNOC’s portfolio. Covestro’s production capabilities in polyurethane and polycarbonate materials support global markets for foams, insulation, automotive components, and other industrial applications. For ADNOC, acquiring Covestro means tapping into established markets with significant growth potential and securing entry into Germany’s advanced manufacturing sector.
ADNOC’s acquisition strategy reflects an ambition to cement the UAE’s position in global energy markets while pursuing a broader environmental agenda through its Fertiglobe platform. The offer, subject to Covestro shareholder approval and regulatory clearances, illustrates ADNOC’s strategic shift as it seeks a pivotal role in green energy and European industry.
