Adnoc's global energy investment arm XRG has secured a 95.1 per cent stake in German chemicals company Covestro, in what is the UAE state energy company's biggest acquisition.
Adnoc International Germany Holding, a wholly owned indirect subsidiary of XRG, holds an 83.43 per cent stake in Covestro, while XRG has an 11.68 per cent stake, the German company said in a regulatory filing to the Frankfurt Stock Exchange on Tuesday.
Adnoc had submitted a €14.7 billion ($17 billion) takeover proposal for Covestro in October last year. XRG, formed in November 2024, said a month later that it would become the majority shareholder of Covestro, after the German chemicals company’s shareholders accepted a takeover offer.
The proposal underwent scrutiny from the European Commission under its rules on foreign subsidies, and in September this year, regulators sought to obtain additional information from Adnoc. A month later, XRG submitted new proposals to address the commission's concerns.
On December 10, XRG said that it had completed its voluntary public takeover offer to the shareholders of Covestro. As part of the transaction, XRG completed a capital increase of €1.17 billion to boost Covestro’s balance sheet under the new ownership structure.
The acquisition “strengthens XRG’s international footprint in chemicals and supports our ambition to become a top three global investor in the sector”, Rainer Seele, president of global chemicals at XRG, said in a statement to The National.
Both companies will work “to realise [Covestro's] full potential”, he said.
XRG was launched as an international lower-carbon energy and chemicals investment company, with an enterprise value exceeding $80 billion.
The latest deal will enable XRG to tap into Covestro's portfolio, comprised of more than 10,000 specialty solutions, 46 production sites and 13 research and development centres.
Covestro's operations support sectors such as mobility, construction, electronics, and healthcare, which are key to the global economy and energy transition. The company's products support production of electric vehicles, wind-turbine blades, semiconductors, smartphones and eyeglass lenses.
XRG has been actively increasing its operations globally and plans to double its asset value over the next decade, capitalising on the energy transition, artificial intelligence and the rise of emerging economies.
In November, XRG signed an initial agreement with Argentina’s YPF and Italy’s Eni to develop an integrated liquefied natural gas project in the South American nation. It also agreed to a non-binding agreement to acquire a stake in Azerbaijan's Southern Gas Corridor to support its regional strategy in the Caspian.
In September, XRG closed the acquisition of an 11.7 per cent stake in the first phase of the Rio Grande LNG project in Texas, which was XRG’s first natural gas investment in the US.
The same month, a consortium led by XRG also withdrew its offer to buy Santos, Australia's second-largest gas producer. The consortium, which included Abu Dhabi's sovereign wealth fund ADQ and global investment firm Carlyle, had made a $19 billion indicative offer to buy Santos in June.
Adnoc also said in September that it was transferring its equity stakes in its listed companies to XRG. The companies included in the transfer are Adnoc Distribution, Adnoc Drilling, Adnoc Gas and Adnoc Logistics and Services, all listed on the Abu Dhabi Securities Exchange. Adnoc also confirmed that its entire stake in Fertiglobe is now held through XRG.
In July, Adnoc said it planned to transfer its 24.9 per cent stake in Austrian energy company OMV to XRG. Adnoc and OMV agreed on terms in March to merge their polyolefins business and create a $60 billion global company.
They said the joint venture company, Borouge Group International, would combine Adnoc’s Borouge with OMV’s Borealis unit. Once complete, Adnoc's entire stake in BGI will be transferred to and held by XRG, the company said.
