Adnoc to acquire German chemicals giant Covestro for €15.9bn

THE Abu Dhabi National Oil Company (Adnoc) is set for a €15.9bn (US$18bn) takeover of German chemicals company Covestro.

Adnoc has been in negotiations to buy Covestro since November, with initial talks pricing the deal at around US$11bn, reports Reuters.

Both companies have settled on an investment agreement that will see Adnoc buy all outstanding shares of Covestro for €62 per share.

Sultan Ahmed Al Jaber, CEO of Adnoc, said: “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.”

Adnoc’s 2030 strategy

The deal marks Adnoc’s largest acquisition to date and follows its 2030 strategy to expand its downstream petrochemical and refining operations.

The company has committed around US$5bn to its own chemicals hub called TA’ZIZ in Ruwais, which is focused on transition fuels, and the production of chemicals, including methanol and ammonia.

Beyond the Gulf, Adnoc has been investing heavily in downstream and upstream activities in Europe.

Since 2023, Adnoc has been in negotiations with Austrian refining company OMV to merge their respective petrochemical businesses, Borouge and Borealis, in a deal worth US$30bn. Adnoc also acquired an almost 25% stake in OMV last year.

Covestro’s sustainability strategy

Covestro launched its Sustainable Future strategy this year in response to its poor financial reports in 2023, ignited by the volatile European chemicals market.

The strategy has seen the company increase its plant capacity, implement the use of AI and chemical recycling in chemicals production, and cut dividends for fiscal 2023.

The investment agreement with Adnoc will run until the end of 2028, when Adnoc is not expected to sell, close, or reduce Covestro’s current operations.

Markus Steilemann, CEO of Covestro, said: “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.”

He added: “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.”