Covestro AG (“Covestro” or “Company”) signed an investment agreement with certain entities of the ADNOC Group, including ADNOC International Limited (“ADNOC International”) and its subsidiary, ADNOC International Germany Holding AG (“Bidder”).
The agreement stipulates, among other items, that the bidder will make a public takeover offer for all outstanding shares of Covestro at a price of €62.00 per share. In addition, ADNOC International is committing itself to fully supporting the company’s ‘Sustainable Future’ strategy.
At the same time, the board of management and the supervisory board of Covestro decided that upon completion of the transaction, the company’s share capital shall be increased by 10% (18.900.000 shares) and that, at and subject to closing, the new shares shall be issued to the bidder against payment of a price per share equal to the offer price, thus, based on an offer price of €62.00 against a total amount of €1.17 billion, under simplified exclusion of subscription rights.
Dr. Markus Steilemann, CEO of Covestro said, “We are convinced that the agreement reached with ADNOC International is in the best interest of Covestro, our employees, our shareholders, and all other stakeholders. With ADNOC International’s support, we will have an even stronger foundation for sustainable growth in highly attractive sectors and can make an even greater contribution to the green transformation. We regard ADNOC International as a financially strong and long-term oriented partner with whom we will further drive our successful “Sustainable Future” strategy in all market conditions. Our complementary growth strategies, shared commitment to advanced technologies, innovation and sustainability are key cornerstones of our partnership”.
His Excellency Dr. Sultan Ahmed Al Jaber, ADNOC Managing Director and Group CEO said, “As a global leader and industrial pioneer in chemicals, Covestro brings unmatched expertise in high-tech specialty chemicals and materials, using advanced technologies including AI. This strategic partnership is a natural fit and aligns seamlessly with ADNOC’s ongoing smart growth and future proofing strategy and our vision to become a top 5 global chemicals company. It represents a pivotal step for both organizations and embodies our disciplined approach to investing in strategic assets that drive long-term value and unlock new growth opportunities, while reinforcing our commitment to diversifying ADNOC’s portfolio. Our aligned strategies uniquely position us to meet the growing global demand for energy and chemical products, while accelerating the transition to a circular economy”.
Covestro has a clear growth strategy and is already making significant progress in its strategic transformation that will further expand its excellent position in attractive growth markets. ADNOC International sees Covestro as the foundational platform of its Performance Materials and Specialty Chemicals business and is convinced of Covestro’s strategic perspective and its vision to become fully circular.
In the joint investment agreement, which runs until the end of 2028, Covestro and certain entities of the ADNOC Group, including ADNOC International, have agreed on the main cornerstones of the partnership. In particular, the agreement contains several obligations on the part of ADNOC International to maintain Covestro’s existing business activities, corporate governance and organizational business structure.
ADNOC International assured Covestro of its full support for Covestro’s “Sustainable Future” strategy and intends to fully support Covestro in further executing on this strategy. To this end, the bidder shall subscribe to new Covestro shares at the offer price via an increase of the Company’s share capital by 10% under simplified exclusion of subscription upon the completion of the transaction, this will result in an amount of €1.17 billion proceeds at an offer price of €62.00 which Covestro will use to foster the further implementation of its growth strategy.
In the agreement, ADNOC International commits, among other items, to recognizing the German governance regulations and to retaining the co-determined supervisory board. An important component is also the commitment that two members of the Supervisory Board on the shareholder representatives’ side will remain independent of ADNOC Group after the takeover offer has been completed.
The investment agreement also contains ADNOC International’s explicit recognition of the existing general works agreements, collective bargaining agreements and the rights of the works councils in Germany. In addition, there are no plans to sell, close or significantly reduce Covestro’s business activities as part of the transaction and ADNOC International undertakes in the Investment Agreement not to initiate any of the above. The Investment Agreement also contains a commitment to protect Covestro’s technology and intellectual property.
As per the press release, furthermore, ADNOC International undertakes in the investment agreement that Covestro will continue to be managed as a stock corporation and that no domination and/or profit and loss transfer agreement will be concluded with Covestro.
