UAE energy giant ADNOC offers 12 bn euros for Germany's Covestro
Date
6/24/2024 7:46:06 AM
(MENAFN- AFP)
Chemical maker Covestro said Monday that it entered "concrete negotiations" with Emirati national energy firm ADNOC after the German group received a takeover offer worth nearly 12 billion euros ($12.8 billion).
Covestro's shares surged more than six percent in Frankfurt following the announcement, which comes after it first disclosed talks were ongoing with the UAE firm in September last year.
"The discussions so far have shown that Covestro and ADNOC can generally reach a common understanding regarding core aspects of a possible transaction," Covestro in a statement.
It said the "starting point" for talks was a "possible offer price" of 62 euros per share from ADNOC. This would value Covestro at 11.72 billion euros, according to an AFP calculation.
"At this time, there is no certainty whether the upcoming negotiations will lead to an agreement. There is also no certainty as to the final terms of any such agreement," said Covestro.
ADNOC welcomed Covestro's decision to start talks on its "final offer", adding in a statement that it looked forward to working with the German group to "swiftly progress" the matter.
The UAE firm is headed by Sultan Al Jaber, who was president of last year's COP28 climate talks in Dubai.
The German firm, based in Leverkusen, has expertise in areas such as chemical recycling that are key for the future of the industry, and which ADNOC is interested in.
Reports first emerged last year that ADNOC had approached Covestro about a potential takeover but initial advances were rejected, leading the UAE side to improve its offer.
The Emirati firm's initial approaches included a takeover price of 55 euros and then 57 euros per share, according to Bloomberg News.
The vital German chemicals industry -- which accounts for about five percent of the country's GDP, and also includes titans like BASF -- has in recent times been gripped by crisis.
The energy-intensive sector was hit hard after Russia invaded Ukraine and slashed deliveries of crucial natural gas to Germany.
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