June 25, 2024

Covestro has entered into “concrete negotiations” with Abu Dhabi National Oil Co. (ADNOC), the company announced on June 24 in a press release on its website. The potential takeover could value Covestro at €11.7 ($12.5) billion, according to Seeking Alpha.
Following consultation with Covestro’s supervisory board, the management board agreed to pursue a potential transaction and conclusion of an investment agreement, as well as to allow for an adequate exchange of company information to confirm assumptions, Covestro said in the release.
The agreement follows several months of open-ended talks. ADNOC first made a $10.9 billion offer to take over Covestro in June of last year, which the polymer materials firm based in Leverkusen, Germany, rejected, saying the amount was too low. The board made an about face the following September, however, after some investors reportedly urged it to reconsider the offer.
Companies find common ground.
In yesterday’s announcement, Covestro’s management board said that discussions since then between the two companies have shown that “Covestro and ADNOC can generally reach a common understanding regarding core aspects of a possible transaction, including support for Covestro’s further growth."
The starting point for the negotiations is a possible offer price of €62 ($66) per Covestro share, subject to due diligence results and the content of an investment agreement, among other things.
“We have made good progress in our discussions with ADNOC,” said Covestro CEO Markus Steilemann in a prepared statement. "Therefore, we have decided to enter into concrete transaction negotiations with ADNOC.”
Covestro added that there is no certainty about the upcoming negotiations leading to an agreement nor the final terms of any such agreement.
Any potential transaction also would be subject to the approval of the companies’ respective boards and competent authorities.
Investors meeting rescheduled.
In light of these developments, Covestro’s Capital Markets Day, scheduled for June 27, 2024, has been postponed until further notice.
The former material science division of Bayer AG, Covestro was spun off in 2015.
Covestro outperformed financial expectations in 2023 but has been lagging behind the S&P 500 since early 2024, according to Seeking Alpha. After Bloomberg reported on June 11 that the takeover deal with ADNOC was advancing, Covestro shares jumped 7% in European trading.
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