In one of the most talked-about mergers in the chemicals industry in recent years, European Union authorities are formally reviewing a deal between ADNOC International Germany Holding AG (an indirect subsidiary of XRG PJSC, formerly known as ADNOC International Limited) and German chemicals giant Covestro AG, Covestro has reported. According to an official statement from Covestro, as of the end of the additional acceptance period on December 16, 2024, more than 172 million shares, representing 91.3% of the company’s total outstanding shares, had already been transferred to ADNOC. This indicates broad shareholder approval and strengthens the chances of Covestro’s full integration into the Emirati giant.
Covestro CEO Dr. Markus Steilemann called the shareholder support “an important victory” in his official statement and noted that the strategic partnership with ADNOC opens a new page for the company, which will be able to even more effectively implement its sustainable development program called Sustainable Future. It is expected that after the official completion of the deal, Covestro will significantly accelerate the transformation processes and expand its presence in the global chemicals sector.
EU prepares to make a decision on ADNOC
A key stage that still needs to be passed is the agreement of the deal with European antitrust regulators. The EU Commission, which acts as an overseer of fair competition in the 27 countries of the bloc, must make a final decision by May 12, 2025. It can either approve the deal in its current form, require additional commitments or open an in-depth four-month investigation into the impact of the merger on the market.
Today, such deals – especially those involving companies outside the EU – are also being examined in the context of foreign subsidies, made possible by the bloc’s new regulations. This mechanism allows the EU to prevent potential unfair competition if the deal is financed with public funds or receives indirect political support. This approach has already been applied to telecommunications group e&, which in 2023 sought to acquire a stake in the Czech company PPF – only after concessions and commitments were made was the deal approved.
Against this background, the ADNOC deal is also being closely scrutinized by regulators. Of particular interest is the scale of the offer – the value of the Covestro takeover is estimated at €15.9 billion, making the transaction the largest acquisition in ADNOC’s history. As the Middle East countries actively move towards economic diversification, the move into the field of specialty chemicals and materials science is a logical strategic step.
Covestro is a new pillar in the ambitions of ADNOC and XRG
For XRG PJSC (the new brand of ADNOC International), Covestro is not just another asset. It is a company that is considered a cornerstone in the development of the holding’s chemical direction, aimed at entering the top 5 global producers of high-tech chemicals. According to XRG representatives, Covestro has a strong portfolio, high competence in the field of polyurethanes, polycarbonates and innovative materials, as well as an ambitious vision to become a fully cyclical company, that is, a company focused on the circular economy.
Covestro itself has been operating as an independent player for more than a decade and is a key supplier to the automotive, construction, household, electronics and medical industries. Its products are also widely used in the sports, healthcare, telecommunications and even the chemical industry itself. The company has offices in many countries around the world and is deeply integrated into global production chains.
The deal is expected to close in the second half of 2025, subject to all regulatory approvals. By the time the first stage of the offer was completed on 27 November 2024, ADNOC had already exceeded the minimum required threshold of 50%+1 share, bringing its stake to 70%. The company has since consolidated an even larger stake, a clear signal of investor confidence in the proposed strategic course.