Covestro signs investment agreement with ADNOC

Covestro AG (Leverkusen, Germany), a manufacturer of high-quality polymer materials and their components, has signed an investment agreement with the Abu Dhabi National Oil Co. (ADNOC) Group (United Arab Emirates), including ADNOC International Ltd. and its subsidiary, ADNOC International Germany Holding AG (the bidder). When this transaction is finalized, two Middle Eastern companies — SABIC and ADNOC — will control a big chunk of engineering thermoplastic resins. This includes Covestro’s Makrolon PC, Apec high-heat PC and Makroblend PC/PBT blends, as well as the Texin and Desmopan family of TPU resins and composites

The agreement stipulates, among other items, that the bidder will make a public takeover offer for all outstanding shares of Covestro at a price of €62.00 per share. ADNOC International is also committing itself to fully supporting the company’s “Sustainable Future” strategy.

Covestro’s board of management and the supervisory board decided that, upon completion of the transaction, the company’s share capital will be increased by 10% (18.900.000 shares) and that, at and subject to closing, the new shares shall be issued to the bidder against payment of a price per share equal to the offer price, thus, based on an offer price of €62.00 against a total amount of €1.17 billion, under simplified exclusion of subscription rights. Shareholders benefit from a premium of 54% on the unaffected share price, prior to any media coverage of a potential transaction.

“We are convinced that the agreement reached with ADNOC International is in the best interest of Covestro, our employees, our shareholders and all other stakeholders. 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,” says Dr. Markus Steilemann, CEO of Covestro.

“Covestro brings unmatched expertise in high-tech specialty chemicals and materials, using advanced technologies including AI. This strategic partnership is a natural fit and aligns with ADNOC’s ongoing smart growth and future proofing strategy and our vision to become a top five global chemicals company,” says His Excellency Dr. Sultan Ahmed Al Jaber, ADNOC managing director and Group CEO. “It represents a pivotal step for both organizations and embodies our disciplined approach to investing in strategic assets that drive long-term value and unlock new growth opportunities, while reinforcing our commitment to diversifying ADNOC’s portfolio.”

Covestro has a clear growth strategy and is making progress in its strategic transformation that will further expand its position in trending growth markets. ADNOC International sees Covestro as the foundational platform of its Performance Materials and Specialty Chemicals business and is convinced of Covestro’s strategic perspective and its vision to become fully circular. 

In the joint investment agreement, which runs until the end of 2028, Covestro and certain entities of the ADNOC Group, including ADNOC International, have agreed on the partnership’s main cornerstones. For instance, ADNOC International has assured Covestro of its full support for Covestro’s “Sustainable Future” strategy and intends to fully support Covestro in further executing it. To this end, the bidder will subscribe to new Covestro shares at the offer price via an increase of the company’s share capital by 10% under simplified exclusion of subscription upon the completion of the transaction. This will result in an amount of €1.17 billion proceeds at an offer price of €62.00 which Covestro will use to foster the further implementation of its growth strategy.

In the agreement, ADNOC International commits, among other items, to recognizing the German governance regulations and to retain the co-determined supervisory board. An important component is also the commitment that two members of the supervisory board on the shareholder representatives’ side will remain independent of ADNOC Group after the takeover offer has been completed. 

The investment agreement also contains ADNOC International’s explicit recognition of the existing general works agreements, collective bargaining agreements and the rights of the works councils in Germany. In addition, there are no plans to sell, close or significantly reduce Covestro’s business activities as part of the transaction, and ADNOC International undertakes in the investment agreement not to initiate any of the above. The agreement also contains a commitment to protect Covestro’s technology and intellectual property. 

Covestro will continue to be managed as a stock corporation and no domination and/or profit and loss transfer agreement will be concluded with Covestro. Moreover, its board of management will continue to be responsible for the operational management and strategic direction of the company. 

In compliance with the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz, WpÜG), the offer document — which is expected to be available within 6 weeks, and other information pertaining to the Bidder’s public takeover offer — will be made available here after approval by BaFin.