Significant Industry Development
UAE energy giant ADNOC has made a major takeover offer for German chemical maker Covestro. The offer is valued at nearly 12 billion euros ($12.8 billion). This strategic move highlights ADNOC’s ambition to expand in the chemical sector.
Covestro’s Share Price Surge
Following the announcement, Covestro’s shares surged by more than six percent in Frankfurt. This rise reflects the market’s positive response to the potential acquisition. Covestro disclosed ongoing talks with the UAE firm in September last year.
Entering Concrete Negotiations
Covestro confirmed it has entered “concrete negotiations” with ADNOC. The proposed offer price is 62 euros per share. This values Covestro at approximately 11.72 billion euros. However, Covestro noted there is no certainty about the negotiation outcome. The final terms of any agreement remain uncertain.
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ADNOC’s Strategic Interests
ADNOC, led by Sultan Al Jaber, who chaired the UN’s COP28 climate talks in Dubai last year, is interested in Covestro’s expertise. Covestro’s strengths in chemical recycling and other innovative areas are key attractions. These capabilities are essential for the industry’s future.
Previous Approaches by ADNOC
Reports first emerged last year that ADNOC had approached Covestro about a potential takeover. Initially, ADNOC’s offers were lower, including takeover prices of 55 euros and 57 euros per share. These offers were rejected, leading ADNOC to improve its bid.
Challenges in the German Chemical Industry
The German chemical industry, including giants like BASF, has faced significant challenges. This sector accounts for about five percent of Germany’s GDP. The industry has been hit hard by the energy crisis following Russia’s invasion of Ukraine. The disruption in natural gas supplies has intensified the crisis for this energy-intensive sector.
ADNOC’s Final Offer
ADNOC welcomed Covestro’s decision to start talks on its “final offer.” ADNOC expressed eagerness to work with Covestro to “swiftly progress” the negotiations. This acquisition, if successful, will strengthen ADNOC’s position in the global chemical market.
The potential acquisition of Covestro by ADNOC represents a strategic move in the chemical industry. Both companies are working towards a possible agreement. The outcome of these negotiations will be crucial for the future of both firms.