A notable financial transaction in the chemicals sector. German plastics and chemicals manufacturer Covestro announced on Monday “ enter into concrete negotiations » on its acquisition by the Emirati national oil company Adnoc.
This offer would value Covestro at 11.72 billion euros, according to an AFP calculation. After this announcement, the price of the German chemist gained +6.95% to 54.80 euros at 12:30 GMT, on a DAX index up 0.58%.
« The Covestro Board of Directors decided today, after consulting the Supervisory Board, to enter into concrete negotiations with Adnoc » with like “ starting point for discussions on a possible offer of 62 euros per share “, he said in a press release.
Negotiations in progress
« At present, it is not certain that the upcoming negotiations will lead to an agreement “, even if “Discussions held so far have shown that Covestro and Adnoc can agree on the essential aspects of a possible transaction “, however clarified Covestro.
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A possible agreement will in fact be subject in particular to the results of an audit known as “ due diligence », that is to say a procedure for consulting the accounts of the company, purchased by the potential buyer. “ We welcome Covestro’s decision to begin a due diligence phase based on our latest offer », Commented a spokesperson for the Emirati group.
Discussions between the two companies have been going on for several months. Their existence was confirmed by Covestro last September. Adnoc’s first approaches included a buyout price of 55, then 57 euros per share, according to the financial news agency Bloomberg. This amount was then gradually increased during discussions between the two companies.
Specialist in chemical recycling and CO2 reuse
Covestro displays technology and expertise in areas such as chemical recycling and CO2 reuse. Adnoc is interested in these crucial technologies for the future of chemistry. Covestro’s product portfolio also provides access to end markets, including electric vehicles, thermal insulation and adhesives.
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« ADNOC’s interest in our company underlines our strong position as one of the world’s leading manufacturers of high-quality plastics and as a pioneer on the path to a circular economy “, declared Markus Steilemann, CEO of Covestro, in September 2023.
As a reminder, the national company Adnoc is the oil giant of the United Arab Emirates, which is among the leading exporters of crude oil in the world. Its boss, Sultan Al Jaber, was notably president of COP28.
German chemistry in great difficulty
Representing 5% of German GDP, German chemicals have been going through a serious industrial crisis for several months linked to rising energy costs since the interruption of Russian gas deliveries. According to a study by the German public statistics office (Destatis), chemicals are the sector which shows the largest declines in production in Germany. In 2022; this lost around 11% in 2022, and in 2023, the drop was 12%.
Another fact illustrating this bad situation, according to the German Chemical Federation (VCI): the utilization rate of production capacities in the sector has been lower than 82% for three years. This constitutes the minimum activity limit according to the federation, which estimates that 15% of the country’s chemical companies would be in serious difficulty.
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Notably the giant Bayer, which in 2023 suffered a very heavy loss of 2.9 billion euros. Its net debt even reached the high sum of 34.5 billion euros. In this context, the chemist announced 2 billion annual savings from 2026.
Another big name in difficulty: BASF, which last February unveiled a new massive savings plan accompanied by job cuts at its historic Ludwigshafen site, where some 39,000 people work. Behind it, a barely veiled threat of relocations.
(With AFP)
