2023-08-14 16:34:00
bloomberg
The Abu Dhabi National Oil Company, ADNOC, has shown willingness to increase its informal offer to buy Germany’s Covestro to about 11.6 billion euros ($12.7 billion), subject to the German chemicals group’s agreement to enter formal talks, people familiar with the matter said. .
The people said the state-backed UAE energy giant had verbally indicated to Covestro that it could come back with a new written proposal of €60 per share, should negotiations begin.
The offer price at this level represents a premium of about 29% to Covestro’s closing stock price on Friday.
The people also said that Covestro’s board is considering options and may respond as soon as this week.
The proposed offer from ADNOC represents an increase on the previous informal offers of 55 euros and 57 euros per share, the most recent of which was last July.
Covestro views the offer as too low, according to the people, who said the companies and their advisors continued to discuss the merits of the deal.
In addition to the price adjustment, ADNOC is trying to address Covestro’s other concerns about the deal, including how the German company’s management could help develop specialty chemical operations, Bloomberg previously reported.
negotiations are ongoing; ADNOC has not made any final decision on whether to increase an offer for Covestro, said the people, who asked not to be identified while discussing confidential information. Representatives of ADNOC and Covestro declined to comment.
potential deals
ADNOC CEO Sultan Al-Jaber is looking for deals to better compete with Saudi Aramco’s chemical subsidiary, SABIC, and to develop the company’s renewable energy operations, as ADNOC is in separate talks with Austrian OMV AG. About a potential merger of two ADNOC-backed companies, Borouge and Borealis, to form a chemicals and plastics giant worth more than $30 billion.
The potential deals dovetail with a broader plan for the UAE to attract investment and technology, as well as build new industries and manufacturing capabilities.
Separately, ADNOC has begun delivering liquefied natural gas to Germany, and has stepped in to help the country off Russian supplies.
Yet Marcus Stillmann, Covestro’s chief executive, recently expressed some concern about the trend of buying or financing more assets from state-backed entities. “You just have to think about what it means for the entire Western world if this trend continues unabated and conflicts break out,” he said in an interview with German business newspaper Handelsblatt this month.
Covestro said earlier in August that it expected full-year profit to come in the lower half of the €1.1 billion and €1.6 billion range, due to sluggish global demand.
Fellow German chemical companies BASF, Evonik Industries and Lanexis warned of a deteriorating outlook for the rest of the year, blaming weak global industrial production and sluggish consumer demand.
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