- Adnoc acquires Covestro for €12 billion, expanding into high-performance materials and diversifying beyond oil.
- Covestro gains a €1.17 billion capital boost from Adnoc to enhance competitiveness and support technological development.
- Adnoc strengthens its presence in Europe, positioning itself in growing sectors like electric vehicles and thermal insulation.
Adnoc, the UAE’s national oil company, has acquired German chemical giant Covestro for €12 billion. This purchase strengthens Adnoc’s strategy to diversify away from oil amid market volatility. Adnoc pays €62 per share, a 54% premium on Covestro’s stock before acquisition rumours surfaced in June 2023. The company uses its cash reserves to finance the deal, showcasing its financial strength.
Covestro, a leading producer of advanced materials, now serves as Adnoc’s platform for high-performance materials, including electric vehicles, adhesives, and thermal insulation products. These industries are increasing in Europe and Asia. By expanding into these sectors, Adnoc aims to secure its presence in industries critical to its future development, moving beyond oil revenues.
The German chemical industry faces challenges as high energy costs and weakened demand affect major players like BASF and Bayer. Covestro, once part of Bayer, has experienced shrinking margins. Adnoc’s takeover brings stability to the company and signals potential foreign acquisitions in Germany’s chemical sector. Companies facing similar struggles increasingly seek partnerships with external investors.
Adnoc’s shift to chemicals highlights its goal to reduce dependence on oil. The company follows a trend of Gulf firms diversifying into non-oil markets, especially in Europe, where demand for innovation and advanced technologies grows.
Covestro will gain significantly from Adnoc’s investment. As part of the deal, Adnoc commits €1.17 billion to boost Covestro’s capital by 10%. This capital injection aims to enhance Covestro’s competitiveness and support its technological development projects, giving the company a much-needed lift in a challenging market.
This acquisition also signals growing geopolitical influence from Gulf nations in European industries. Adnoc’s move into non-oil sectors reflects the UAE’s broader efforts to reposition itself within the global economy. However, Germany’s financial regulator, BaFin, must still approve the deal before it can close.
Investors see this acquisition as a chance to create synergies between Adnoc’s oil assets and Covestro’s expertise in advanced materials. The merger’s success will depend on how well the two companies align their operations and corporate cultures. Adnoc intends to leverage Covestro’s strengths to establish a more substantial presence in global chemical markets, focusing on Europe and Asia.
This acquisition fits into a larger strategy by Gulf countries to diversify their economies. Through the Covestro deal, Adnoc secures a stronger foothold in Europe while positioning itself in sectors critical to the global shift toward sustainability and advanced technologies. This move marks a new chapter in Adnoc’s growth, demonstrating its commitment to transforming into a more diversified and resilient enterprise.