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Adnoc to issue public takeover offer for Covestro: Abu Dhabi National Oil Company (Adnoc) will make a public takeover offer to acquire German chemicals company Covestro for EUR 14.7 bn, including EUR 3 bn in debt, according to a statement. Covestro’s board also approved a 10% share capital increase, issuing 18.9 mn new shares to Adnoc at the same offer price, raising EUR 1.17 bn. The transaction marks Adnoc’s biggest yet, and the biggest for a Middle East firm in Europe.
What’s next? Covestro’s management and supervisory board will recommend the transaction to the firm’s shareholders, subject to a review of the bid.
We knew this was coming: The state-run oil firm was said to be finalizing a formal bid to acquire Covestro in August, with Adnoc’s CEO Sultan Al Jaber reportedly touching down in Germany to wrap up negotiations. Adnoc said in June that it was ready to raise its takeover bid to EUR 62 per share after revising its offer three times during the talks, which have been ongoing for over a year.
Adnoc’s final bid: The final offer of EUR 62 per share represents a 52% premium to Covestro’s share price in June 2023, and 21% to the price in June this year.
Business as usual at Covestro: Adnoc will maintain Covestro’s business activities, governance structure, and co-determined supervisory board, with no plans to reduce, sell, or close operations, according to the statement. The company also clarified that it will not execute a domination or net income and loss transfer agreement with Covestro.
Covestro’s management has indicated its openness to a potential delisting or a squeeze-out of minority shareholders if Adnoc moves forward with such plans, while affirming its commitment to remain a stock corporation with headquarters in Leverkusen. The chemical giant also said it will hold off on proposing any dividend payments until the transaction with Adnoc is either completed or called off.
This is part of a wider push into the chemicals sector, as it looks to diversify revenues with more low-carbon sectors. This acquisition allows it to become one of the top five chemicals players worldwide, state news agency Wam reports. The state-owned oil giant acquired earlier this year a 24.9% minority stake in Austria-based integrated oil and gas company OMV that was previously held by Abu Dhabi sovereign wealth fund Mubadala, and was also working on a bid to acquire a USD 2.1 bn stake in Brazilian petrochemicals company Braskem, but later withdrew its offer.
ADVISORS- Goldman Sachs, Perella Weinberg, Linklaters, Rothschild & Co, Macquarie Capital, and SZA Schilling, Zutt & Anschütz served as financial and legal advisors for Covestro.
OTHER M&A NEWS-
Masdar completes 50% acquisition of Terra-Gen: Renewables giant Masdar completed its acquisition of a 50% stake in US renewables firm Terra-Gen, according to a press release (pdf). ECP has fully offloaded its stake in Terra-Gen as part of the transaction, and Igneo Infrastructure Partners will retain its 50% stake in the company. Masdar signed the equity acquisition agreement in March.
What’s in the bag? Terra-Gen’s operating portfolio includes 3.8 GW of wind, solar, and battery storage projects with 5.1G Wh of energy storage across 30 renewable energy facilities, the statement notes. The company has over 12 GW of solar, wind, and battery storage projects currently in development, with 386 MW of Texas wind and California solar and 512 MWh of California energy storage facilities lined up to begin operations in 2025.
Masdar is setting its sights on US growth: Masdar is also looking to grow “beyond tenfold” in the US over the next three to seven years and wants to reach 100 GW of global energy capacity by 2030 — part of a wider ambition to achieve 100 GW of global energy capacity by 2030.
ADVISORS- BMO Capital Markets and JP Morgan served as financial advisors and White & Case and Covington & Burling served as legal advisors to Masdar. Lazard and Guggenheim Securities served as financial advisors and Latham & Watkins served as legal advisors to Terra-Gen.
