Abu Dhabi’s ADNOC Prepares $16 Billion Bid for Germany’s Covestro

Abu Dhabi’s state oil giant, ADNOC, is preparing to make a formal bid for German polyurethane producer Covestro, with the proposed deal valued at €14.4 billion ($16 billion). This transaction is anticipated to become Europe’s largest takeover deal of the year. According to a report by the UK's Financial Times, ADNOC's offer will include debt, making it a substantial financial commitment.

The Financial Times also reported that Sultan Al Jaber, ADNOC's chief executive, visited Germany in August to finalize the negotiations. Earlier in June, Covestro indicated that the starting point for discussions was a potential offer price of €62 per share, which ADNOC had suggested. The negotiations were initiated after ADNOC presented an enhanced takeover bid of $12.7 billion, prompting Covestro to engage in more detailed talks.

Covestro, headquartered in Leverkusen, was previously a plastics division of pharmaceutical giant Bayer, which spun it off as a publicly traded entity in 2015. The company specializes in producing foam chemicals used in a variety of applications, including mattresses, car seats, and building insulation.

It is also said that Covestro’s focus on foam production aligns with broader energy transition trends, positioning it strategically within the industry. The potential acquisition, if completed, would represent one of the largest cash transactions ever in the chemical sector. Moreover, it would mark the first instance of a DAX 40 company being acquired by a Gulf state.

The deal underscores ADNOC’s strategic interest in expanding its portfolio within the chemical sector, leveraging Covestro’s expertise in a field that is becoming increasingly relevant to global energy transition efforts. If the offer is accepted, it will not only highlight ADNOC’s growing influence but also set a significant precedent for future cross-border acquisitions in the chemical industry.

The Abu Dhabi National Oil Company (ADNOC) is the state-owned oil company of the United Arab Emirates (UAE) and is the world’s 12th largest oil producer. Unlike many global oil companies that face pressure to cut production due to climate concerns, ADNOC is investing significantly to boost its oil output. As one of the largest energy companies globally, ADNOC excels in both reserves and production. The company operates 16 subsidiaries across the upstream, midstream, and downstream sectors, and it is involved in the development of both onshore and offshore gas fields.

Covestro is among the world's leading polymer companies, specializing in the production of advanced polymer materials and innovative solutions for everyday products. The company caters to major industries such as automotive, construction, wood processing, furniture, electrical, electronics, and household appliances. Additionally, Covestro's expertise extends to sectors such as sports and leisure, cosmetics, healthcare, and the chemical industry itself.