Abu Dhabi National Oil Co., known as Adnoc, has garnered the backing of Covestro's supervisory and management boards for a significant takeover proposal that values the German chemicals manufacturer at 11.7 billion euros. This strategic move reflects Adnoc's ambition to establish itself as a leading player in the global chemicals market. In a public announcement, certain divisions of the state-owned oil group from the United Arab Emirates detailed their plan to initiate a cash bid of 62 euros per share for Covestro.
This initiative aligns with their investment agreement, which focuses on advancing the 'sustainable future' strategy of the German company, ultimately steering Adnoc closer to its objective of enhancing its stature in the chemicals sector on the world stage. Adnoc's Managing Director and Group Chief Executive Officer, Sultan Ahmed Al Jaber, articulated the reasoning behind this partnership, stating, 'This strategic partnership is a natural fit and aligns seamlessly with Adnoc's ongoing smart growth and future-proofing strategy.
Our vision is to become a top 5 global chemicals company.' The proposed offer price of 62 euros represents a notable premium of 54% compared to Covestro's last closing price prior to speculation regarding the acquisition, which stood at the end of June 2023. However, the execution of this deal hinges on achieving a minimum acceptance threshold of 50% plus one share, in addition to customary requirements such as regulatory clearances from the European Union.
Covestro's management teams are currently evaluating the offer and plan to present a recommendation to shareholders after they analyze the detailed offer document, anticipated to be released within the next six weeks, adhering to German regulatory standards. In a bid to reinforce its commitment to Covestro's growth trajectory, Adnoc International Ltd.
has announced that its subsidiary, Adnoc International Germany Holding, will be subscribing to 18.9 million new shares of Covestro at the aforementioned offer price, amounting to a substantial investment of 1.17 billion euros. This transaction will result in a 10% increase in Covestro's overall share capital. The investment agreement is slated to remain active until the conclusion of 2028 and mandates that Adnoc International uphold Covestro's current business operations, corporate governance, and organizational structure.
This ensures the protection of Covestro's technological advancements and intellectual property, explicitly prohibiting the sale, closure, or drastic reduction of its business endeavors. As a globally recognized entity with assets and investments across energy, chemicals, and low-carbon solutions, Adnoc perceives Covestro as 'the foundational platform' for its performance materials and specialty chemicals ventures. Covestro's CEO, Markus Steilemann, expressed confidence in the agreement, stating, '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.
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.' Current Price: $58.00, Change: $+0.36, Percent Change: +0.62%.