Adnoc acquires Covestro for 12 billion euros as part of its diversification strategy

Adnoc, the national oil company of the United Arab Emirates, announces the acquisition of Covestro, a German chemical giant, for 12 billion euros. This acquisition is part of its strategy to diversify its activities and strengthen its presence in Europe.

Partagez:

Adnoc is expanding into the chemical sector with the acquisition of Covestro, a manufacturer of advanced materials, for 12 billion euros. This move marks a strategic shift, as the Emirati company seeks to diversify amid the volatility of oil markets. The group is offering 62 euros per share, which represents a 54% premium over Covestro’s stock price before the initial speculation in June 2023. This transaction will be financed through Adnoc’s available cash, demonstrating its strong financial capacity.

With this acquisition, Adnoc aims to position Covestro as its main platform for high-performance materials, thereby enhancing its presence in sectors such as thermal insulation, adhesives, and components for electric vehicles. These strategic segments, which are growing rapidly in Europe and Asia, are considered critical for the group’s future development.

A Challenging Context for German Chemical Industry

The German chemical industry is going through a period of turbulence, with major players such as BASF and Bayer facing high energy costs and weakened demand. Covestro, once a subsidiary of Bayer, has not been immune to this situation, seeing its margins shrink due to rising expenses. Adnoc’s acquisition comes in this context of fragility, where several German companies are looking for partnerships or foreign buyers to stabilize their operations.

By integrating Covestro, Adnoc could trigger a wave of foreign acquisitions in the European chemical industry, highlighting the challenges Germany, the largest economy in the eurozone, faces to remain competitive.

Deployment of a Diversification Strategy

Adnoc, aiming to reduce its dependency on oil revenues, is turning to high value-added specialty sectors. The acquisition of Covestro allows it to diversify its portfolio while establishing a strong foothold in the European market. This initiative is part of a series of recent operations by Gulf companies seeking to reallocate their capital beyond hydrocarbons, particularly in Europe, where innovation and advanced technologies are in demand.

Covestro, on its part, will benefit from a significant capital injection, with Adnoc committing to a 1.17 billion euro capital increase, representing 10% of the company’s current capital. This investment aims to enhance its competitiveness and support its technological development projects.

Outlook and Acquisition Challenges

Adnoc’s acquisition of Covestro could also have geopolitical implications, strengthening the Gulf countries’ influence in European industries. The rise of groups like Adnoc in sectors unrelated to oil reflects a desire to redefine their strategic positioning within the global economy. Regulatory authorities, including the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), will still need to approve this transaction.

Investors see this acquisition as an opportunity to create new synergies between Adnoc’s oil assets and Covestro’s expertise in advanced chemical products. However, the success of this integration will depend on the ability of both groups to align their corporate cultures and coordinate their operations on an international scale.

Faced with recurrent shortages, Zambia is reorganising its fuel supply chain, notably issuing licences for operating new tanker trucks and service stations to enhance national energy security and reduce external dependence.
The closure of the Grangemouth refinery has triggered a record increase in UK oil inventories, highlighting growing dependence on imports and an expanding deficit in domestic refining capacity.
Mexco Energy Corporation reports an annual net profit of $1.71mn, up 27%, driven by increased hydrocarbon production despite persistently weak natural gas prices in the Permian Basin.
S&P Global Ratings lowers Ecopetrol's global rating to BB following Colombia's sovereign downgrade, while Moody’s Investors Service confirms the group's Ba1 rating with a stable outlook.
Shell group publicly clarifies it is neither considering discussions nor approaches for a potential takeover of its British rival BP, putting an end to recent media speculation about a possible merger between the two oil giants.
The anticipated increase in the tax deduction rate may encourage independent refineries in Shandong to restart fuel oil imports, compensating for limited crude oil import quotas.
Petro-Victory Energy Corp. starts drilling of the AND-5 well in the Potiguar Basin, Brazil, as the first phase of an operation financed through its strategic partnership with Azevedo & Travassos Energia.
The Texan Port of Corpus Christi has completed major widening and deepening work designed to accommodate more supertankers, thus strengthening its strategic position in the US market for crude oil and liquefied natural gas exports.
BP Prudhoe Bay Royalty Trust is offering its interest in Prudhoe Bay, North America’s largest oil field, as part of its planned dissolution, assisted by RedOaks Energy Advisors for this strategic asset transaction.
CNOOC Limited’s Hong Kong subsidiary and KazMunayGas have concluded a nine-year exploration and production contract covering nine hundred and fifty-eight square kilometres in Kazakhstan, sharing investment and operations equally.
Donald Trump announced that the United States will no longer oppose Chinese purchases of Iranian oil, immediately triggering a drop in global crude oil prices and profoundly reshaping international energy trade partnerships.
Research firm S&P Global Commodity Insights lifts its outlook for the fourth straight year, betting on three point five mn barrels per day from 2025 despite lower prices.
Enbridge plans to expand its infrastructure to increase oil transportation from the American Midwest to the Gulf Coast, anticipating rising exports and addressing current market logistical constraints.
US commercial crude inventories significantly decline by 3.1 million barrels, widely surpassing initial forecasts and immediately pushing international oil prices higher.
The UK could have hydrocarbon reserves twice as large as current official estimates, according to Offshore Energies UK, highlighting the impact of fiscal policies on forecasts and the economic future of the North Sea.
Following US strikes in Iran, international energy companies partially evacuate their teams from Iraq as a precaution, while Lukoil maintains its entire personnel on southern oilfields.
Chinese independent refineries remain cautious amid rising Iranian crude prices driven by escalating Iran-Israel tensions, potentially threatening access to the strategic Strait of Hormuz.
Gazprom, affected by a historic $6.9bn loss in 2023, is offering Pakistani state-owned firm OGDCL its petroleum assets in Nigeria to strengthen its presence in Asia’s energy market, according to Pakistani sources.
Donald Trump urges control of oil prices following U.S. military action against Iranian nuclear facilities, amid escalating tensions around the strategic Strait of Hormuz, threatening to significantly impact global markets.
PermRock Royalty Trust announces a monthly distribution of $539,693 to unit holders, impacted by reduced oil volumes and prices in April, partly offset by increased natural gas sales.