Covestro shareholders approve XRG takeover deal

The acquisition is expected to close in the second half of next year

Adnoc headquarters in Abu Dhabi. In October, XRG, then known as Adnoc International, agreed to buy Covestro for an enterprise value of €14.7 billion ($15.3 billion). Khushnum Bhandari / The National

Adnoc’s global energy investment arm XRG announced on Thursday that it would become the majority shareholder of Covestro, after the German chemicals company’s shareholders accepted a takeover offer.

Shares tendered and already bought by XRG amount to 91.32 per cent of Covestro's total outstanding shares, XRG said in a statement on Thursday. The deal, which is expected to close in the second half of 2025, is subject to further regulatory approvals, the company added.

In October, XRG, which was called Adnoc International at the time, agreed to buy Covestro for an enterprise value of €14.7 billion ($15.3 billion). “Today’s significant milestone marks the first major transformational investment for XRG in chemicals, accelerating our ambition to become a top five global chemicals player,” said Dr Sultan Al Jaber, executive chairman of XRG and Adnoc’s chief executive.

Adnoc's acquisition of Covestro is the UAE's largest cross-border deal and the biggest foreign direct investment into Germany in the past five years. Leverkusen-based Covestro is one of the world’s largest manufacturers of high-quality polymer materials and their components. It reported earnings before interest, taxes, depreciation and amortisation of €287 million in the third quarter of this year, which was up nearly 4 per cent from the same period a year in 2023.

However, the company reduced its full-year 2024 earnings forecast for the second time this year, citing challenging economic conditions. Covestro now expects earnings before interest, taxes, depreciation and amortisation to be in the range of €1 billion and €1.25 billion, down from its previous forecast of €1.0 billion to €1.4 billion.

“Covestro lies at the heart of XRG’s growth plans and complements its decarbonisation and advanced technologies leadership goals,” XRG said. European chemical companies such as Covestro saw their profit margins squeezed by elevated natural gas prices triggered by the Russia-Ukraine war.

This year, Adnoc increased its shareholdings in Borealis and Borouge – joint ventures with OMV – by acquiring a 24.9 per cent stake in the Austrian energy company. In July, a consortium comprising Borouge, Adnoc and Borealis signed an agreement with Chinese companies to set up a polyolefins complex in Fujian Province, which will have a capacity of 1.6 million tonnes a year.

By 2030, the petrochemical industry’s global market value is expected to exceed $1 trillion, from $584.5 billion in 2022, according to Statista. China, the world’s second-largest economy, plans to add capacity of 134 million tonnes per year, dominating the market in the medium term, the data portal said.