According to people familiar with the case, Abu Dhabi National Oil Co., an oil behemoth looking to expand its chemical operations through a series of ambitious transactions, has increased its buyout bid for Covestro AG to over €11 billion ($12.4 billion).
In an effort to get the German firm to negotiate, Adnoc reportedly raised their offer to around €57 per share. That's a rise from the first low offer of about €55.
According to the persons, who requested not to be named because the matter is confidential, the state-backed corporation has expressed confidence in Covestro's strategy and management. Late in Frankfurt trading, Covestro shares rose 5.6%, closing at €50.30, a new all-time high for the company's stock price since February 2022.
Leverkusen-based Covestro reportedly remarked last month that they thought Adnoc's initial offer was too low. Concerns over Adnoc's proposed specialised activities were also highlighted by Covestro.
To better compete with Saudi Aramco and its Sabic Chemical subsidiary, Adnoc CEO Sultan Al Jaber has been actively seeking mergers. The Abu Dhabi company is in separate negotiations with Austria's OMV AG to build a $30 billion chemicals and plastics powerhouse by merging two businesses they back, Borouge Plc and Borealis AG.
The proposed deals fit within a larger strategy by the United Arab Emirates to expand its industrial base and attract foreign investment. To find more markets for its oil and natural gas output and to manufacture plastics for consumer products, Adnoc has been establishing a refining and chemicals centre in Abu Dhabi.
According to the sources, Adnoc has made attempts to allay Covestro's fears over the offer by clarifying how it will assist the German firm's management in expanding its speciality chemical activities. Adnoc's proposal may be increased further if talks take place.
Covestro's reaction to the most recent proposal is unknown at this time, but negotiations continue. Both Adnoc and Covestro representatives were unwilling to elaborate.
Adnoc, which produces nearly all of the UAE's oil, has announced plans to spend $150 billion on infrastructure upgrades to increase the output of crude oil, natural gas, and chemicals. Low-carbon energy investments are also included.
