Covestro AG has entered into "concrete negotiations" that could result in the German materials firm being acquired by Abu Dhabi National Oil Co. (ADNOC).
Covestro also announced cost cutting measures, our sister publication Sustainable Plastics explained where most of the cuts will take affect.
The two firms began negotiations in September 2023. In a June 24 news release, officials with Covestro in Leverkeusen, Germany, said that "discussions so far have shown that Covestro and ADNOC can generally reach a common understanding regarding core aspects of a possible transaction."
They added that the starting point for negotiations is a possible offer price of 62 euros ($66.50) per Covestro share. That offer would value Covestro at almost $14.4 billion and is more than 23 percent higher than Covestro's opening per-share price on June 24. Previous ADNOC offers for Covestro had been estimated at $11 billion and $12 billion.
"We have made good progress in our discussions with ADNOC," Covestro CEO Markus Steilemann said. The two firms now intend to proceed with negotiations about a potential transaction and confirmatory due diligence "in a timely manner."
"At this time, there is no certainty whether the upcoming negotiations will lead to an agreement," Covestro officials said. "There is also no certainty as to the final terms of any such agreement."
Any potential transaction would be subject to approval of the respective boards of the parties and clearance by authorities. In light of recent developments, Covestro has postponed its Capital Markets Day investor event, which had been scheduled for June 27.
Covestro has a U.S. headquarters in Pittsburgh. The company is a global supplier of polycarbonate resins and films, thermoplastic polyurethane, PU materials and foams, and other specialty chemicals and materials. The firm employs more than 17,000 and posted sales of $15.4 billion in its 2023 fiscal year.
Covestro was spun off from Bayer AG in 2015.
State-owned ADNOC is one of the world's leading energy producers. The firm has capacity of more than 4 million barrels of oil and around 11.5 billion cubic feet of natural gas per day and operates across the entire hydrocarbon value chain, including petrochemicals.
It has been seeking acquisitions to move up the materials value chain. It has also been in negotiations to buy a controlling stake in Braskem's parent company, Novonor.