UPDATE: ADNOC makes public takeover offer for Germany’s Covestro

LONDON (ICIS)–Abu Dhabi state oil and petrochemicals player ADNOC has launched a public takeover offer for Germany-based producer isocyanates, polycarbonates and adhesives specialist Covestro, representing an equity value of €11.7 billion.

After over a year of reports of a possible deal between the players and concrete negotiations that have been underway since June this year, the Emirati company made a concrete public takeover offer of €62 per share.

The price represents a 21% premium to Covestro’s per-share value at the close on 23 June, when the company announced the beginning of due diligence procedures between the two companies.

ADNOC estimates the enterprise value of the deal, which also includes net debt and pension obligations that would be taken on as a result of a purchase, at €14.7 billion.

The company will also subscribe to new shares representing a 10% increase of Covestro’s share capital at the offer price, which will result in proceeds of €1.17 billion to be used to further the Leverkusen-based producer’s growth strategy.

The company had not responded for requests for comment on whether that sum is part of the offer price or in addition to it at the time of publication.

The deal is subject to a minimum acceptance threshold of 50% of Covestro’s issued share capital plus one share, with Covestro’s management and supervisory boards backing the deal.

The joint investment agreement, which would stand until the end of 2028 if the deal goes through, ADNOC has committed not to sell, close, or significantly reduce Covestro’s business activities, and to abide by existing works agreements.

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

The deal will play into ADNOC’s plan to diversify and build out its chemicals platform, according to CEO Sultan Adhem Al-Jaber.

“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,” he said.

If the takeover deal closes, Covestro will continue to be managed as a stock corporation, the company added.

(Update re-leads, adds detail throughout)

Thumbnail photo source: Covestro