Abu Dhabi National Oil Co. (ADNOC) has indicated it is willing to boost its informal offer for Germany chemicals group Covestro AG to about €11.6 billion (approximately $12.7 billion) on the condition that Covestro agrees to enter formal talks, Bloomberg reported, citing unnamed sources with knowledge of the matter.
The state-backed energy group has verbally signaled to Covestro that it could come back with a new written proposal of €60 per share, according to the report. An offer at that level would represent a premium of about 29% to Covestro’s closing share price on Aug. 11.
Covestro’s management and supervisory board are considering their options. ADNOC last raised its informal offer to €57 per share in July.
According to some analysts, it is unclear why ADNOC is interested in buying Covestro, considering how badly the petrochemical business has been doing. Covestro early this month reported a 21% year-over-year decline in second-quarter revenues, to €3.7 billion.
ADNOC’s CEO Sultan Al Jaber is reportedly hunting for deals to better compete with Saudi Aramco’s SABIC chemicals unit, and to develop the company’s own downstream and renewable energy operations.
Covestro CEO Markus Steilemann recently expressed concern about the trend of more assets being bought or financed by entities backed by autocratic states, according to the report, citing an interview Steilemann did with German business newspaper Handelsblatt earlier this month.
ADNOC is separately in talks with Austria’s oil and gas group OMV AG regarding a possible merger of the two companies that could form an entity worth $30 billion. OMV is the majority owner (75%) of Austrian company Borealis AG, which last month completed the sale of its nitrogen fertilizer assets to the Czech Republic’s chemicals and fertilizer group Agrofert (GM July 7, p. 1).