Brussels, Belgium — The European Commission on Friday greenlit the takeover of German chemical firm Covestro by UAE state oil giant ADNOC, after the Emirati firm promised steps to alleviate competition fears.
Plastics maker Covestro accepted a bid from the Abu Dhabi National Oil Company in October, valuing the company at 12 billion euros ($14 billion).
The EU executive opened an investigation in August to determine whether subsidies from the UAE had allowed ADNOC to outbid competitors for the firm and would help it pump investments into Covestro that would skew the market.
ADNOC offered a series of steps to remedy those concerns, and a commission statement said it was granting approval for the deal “conditional upon full compliance with the commitments offered.”
Those included removing an unlimited UAE state guarantee in case of insolvency, and sharing Covestro’s patents in the area of sustainability with other market participants.
“We have carefully assessed the foreign subsidies involved in this transaction to ensure a fair and competitive internal market,” said EU competition chief Teresa Ribera.
“Our review confirmed that the commitments offered by ADNOC effectively address the potential negative effects by allowing market participants to access key Covestro patents in the field of sustainability,” she said.
The acquisition came as Germany’s key chemicals sector, which makes up around five percent of the country’s GDP, has been gripped by crisis.
ADNOC has promised to inject around 1.2 billion euros into the chemicals firm through the issuance of new shares under the terms of the takeover.
Challenges facing Germany’s energy-intensive chemicals industry show no signs of abating.
Weak demand and high energy costs in the wake of the 2022 Russian invasion of Ukraine have weighed on producers and led them to cut back on production in Germany.
Covestro, which makes chemicals used in everything from building insulation to electric vehicles, had unveiled a savings plan ahead of the takeover announcement last year.
The Leverkusen-based firm, which was spun off from chemicals giant Bayer in 2015, said it would cut material and personal costs in the hopes of saving some 400 million euros annually.
