European Union Clears ADNOC‘s €12 Billion Covestro Acquisition
Brussels, Belgium – November 15, 2023 – The European Union has approved ADNOC’s proposed acquisition of Covestro, a German chemicals manufacturer, for approximately €12 billion. The clearance follows an extended inquiry by the European Commission into potential distortions caused by ample government financing received by the Abu Dhabi National Oil Company (ADNOC). The decision, announced today, is contingent upon legally binding commitments offered by ADNOC to address the Commission’s concerns regarding fair competition within the 27-nation bloc.
The approval marks a notable step in ADNOC’s strategic expansion into the petrochemicals sector and its diversification away from oil and gas. The Commission’s scrutiny stemmed from new rules designed to prevent sovereign wealth funds from leveraging state aid to unfairly disadvantage competitors lacking similar financial backing. This case tested the submission of those rules, with officials initially warning that ADNOC’s government funding could create an uneven playing field.
The investigation, launched in July 2023, focused on whether ADNOC’s access to state resources would allow it to undercut competitors or stifle innovation in the European market. To secure approval, ADNOC offered concessions, including commitments related to pricing and access to its production capacity. These concessions aim to ensure that European companies continue to have a viable competitive landscape following the acquisition.
the deal is expected to bolster ADNOC’s portfolio of specialty chemicals and materials, aligning with its broader strategy to invest in growth sectors and reduce its carbon footprint. Covestro, a leading producer of polymers and polyurethanes, will benefit from ADNOC’s financial strength and access to feedstock, possibly accelerating its own sustainability initiatives. The transaction is now poised to close, pending fulfillment of the agreed-upon commitments.
