ADNOC German deal is blueprint for Gulf takeovers
01/10/2024 11:19
(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own.)
By Karen Kwok
LONDON, Oct 1 (Reuters Breakingviews) - The UAE energy
giant agreed to buy chemicals group Covestro for $16 bln
including debt. It’s paying a big premium, retaining management
and injecting extra capital. The terms are a sign of the hoops
Middle Eastern buyers must jump through to get hold of sensitive
European assets.
Full view will be published shortly.
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CONTEXT NEWS
Abu Dhabi state oil giant ADNOC on Oct. 1 said it had agreed
to buy German chemicals producer Covestro for 62 euros per
share, implying an equity value of 11.7 billion euros and an
enterprise value for the German company of 14.7 billion euros.
The United Arab Emirates-based acquirer also said that it
would subscribe to a planned 1.2-billion-euro capital increase
for Covestro after completing the offer.
ADNOC has set a minimum acceptance threshold for the deal of
50% plus one share. The buyer also said that it will not seek a
domination or profit and loss transfer agreement, which under
German law allows a company to directly control the management
and cash flow of a target.
Covestro and ADNOC have agreed a so-called investment
agreement which runs until the end of 2028. The terms require
ADNOC to maintain Covestro's existing business activities,
corporate governance and basic organisational structure, while
also continuing to recognise existing labour and collective
bargaining agreements with employees.
Shares in Covestro rose 4% to 58 euros as of 0900 GMT on
Oct. 1.
(Editing by Liam Proud and Streisand Neto)
((For previous columns by the author, Reuters customers can
click on KWOK/
karen.kwok@thomsonreuters.com))