Covestro AG said its management board decided to enter “open-ended discussions” over a potential takeover by Abu Dhabi National Oil Co.
(Bloomberg) — Covestro AG said its management board decided to enter “open-ended discussions” over a potential takeover by Abu Dhabi National Oil Co.
Whether a deal “will be reached is open and will depend on the course of the forthcoming discussions,” Covestro said in a statement Friday, confirming an earlier Bloomberg News report.
Covestro said its management board will seek corporate government provisions to protect its future strategy and sustainability.
The decision to entertain Adnoc’s takeover approach paves the way for management of the German chemical firm to begin detailed negotiations. It comes after weeks of discussions between the companies’ advisers over a potential deal that could value Covestro at €11.6 billion ($12.4 billion) or more.
Covestro shares rose as much as 11% on Friday. The closed up 7.8% in Frankfurt, giving the company a market value of €10 billion.
State-backed Adnoc has signaled its willingness to fund roughly $8 billion in investments at Covestro after a deal is completed, a move that could help win over executives and labor representatives, according to people familiar with the matter, who asked to not be identified because the matter isn’t public.
Adnoc verbally signaled to Covestro in mid-August that it’s willing to make a fresh written proposal of €11.6 billion, or €60 per share, if it would help get negotiations started, people familiar with the matter said at the time. That would improve on previous informal bids of €55 and €57 per share, which Covestro saw as too low.
In addition to price, Adnoc has been trying to address Covestro’s other concerns about a transaction, including how it would help the German company’s management develop the specialty chemical operations, Bloomberg News reported previously.
Representatives for Adnoc declined to comment.
(Updates with details from statement starting in first paragraph.)
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