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Abu Dhabi state oil giant ADNOC is poised to a make a formal offer for German polyurethane producer Covestro in a 14.4 billion euros ($16 billion) that is being called Europe’s biggest takeover deal of the year.
Following a series of talks that have lasted more than a year, ADNOC is expected to make a formal offer of about €14.4 billion, including debt, according to a report by the UK’s Financial Times, citing two people familiar with the matter.
The news daily further reported that Sultan Al Jaber, the Abu Dhabi group’s chief executive, was in Germany in August to finalise negotiations.
In June, Covestro said a starting point for the negotiations was a possible offer price of €62 per Covestro share that Adnoc had indicated. The Leverkusen-based company started negotiations with ADNOC after the UAE company made an improved $12.7 billion takeover bid.
Covestro is the former plastics-making business of pharmaceutical giant Bayer, which took it public in 2015. Its main products include foam chemicals used in mattresses, car seats and insulation for buildings.
The person working on the deal said Covestro’s specialisation in foams placed it in the middle of an energy transition megatrend, FT reported, adding that the deal, if accepted, will be one of the largest cash transactions ever in the chemical sector and the first time a Dax 40 company has been bought by a Gulf state.
(Writing by Bindu Rai, editing by Seban Scaria)