ADNOC-Covestro deal needs EU, UK, US, China and multiple other approvals
That’s on top of approval under the EU’s new rules for vetting foreign subsidies. That stands out as the clearest obstacle to the deal’s completion (see MLex comment here).
Abu Dhabi’s state-owned oil company announced on Oct. 1 that it had agreed to buy Covestro for 62 euros a share, valuing the deal at 14.7 billion euros ($15.9 billion). ADNOC has also committed to inject 1.17 billion euros of capital into Covestro after the closing of the deal.
At the time, Covestro told investors the deal would require a “multitude” of regulatory approvals.
Today’s offer document said that the deal needs competition approval from the European Commission, plus in Brazil, Canada, China, the Common Market for Eastern and Southern Africa, Egypt, India, Japan, South Korea, Mexico, Morocco, South Africa, Switzerland, Taiwan, Turkey, the UK, the US, and Vietnam.
“[ADNOC] submitted a Case Team Allocation Request to the EU commission on 1 October 2024. Once the EU Commission allocates a team, [ADNOC] will engage in the prenotification discussions with the EU commission,” Covestro said.
The takeover needs foreign direct investment approvals from governments in Belgium, Canada, France, Germany, Italy, Spain, the UK, and the US.
It also needs approval from the commission under its Foreign Subsidies Regulation, which polices subsidies from abroad to ensure they’re not distorting the EU market.
The Abu Dhabi government wholly owns ADNOC, so the EU regulator might be concerned that it used unfair subsidies from the big-spending UAE state to finance Covestro’s acquisition or might use them to distort future competition in the EU.
According to the offer document, all the required approvals must be received “at the latest by Dec. 2, 2025.”
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