Frankfurt, Germany–German chemicals and plastics maker Covestro said Friday it had agreed to enter talks about a potential takeover by the United Arab Emirates’ energy giant ADNOC.
Covestro’s management board had decided to “enter into open-ended discussions with Abu Dhabi National Oil Company,” the German company said in a statement.
It is the first time Covestro has publicly commented on any kind of discussions, after earlier reports said it had rejected informal approaches from ADNOC, deeming them to be too low.
“Whether, in which form and, if applicable, at which conditions an agreement between the parties will be reached is open and will depend on the course of the forthcoming discussions,” the German firm added in its statement.
After initial advances were rejected, ADNOC indicated to Covestro in mid-August that it was willing to make a new, improved proposal of 11.6 billion euros ($12.4 billion) if it would get talks moving, Bloomberg News reported.
Covestro shares had risen sharply in Frankfurt earlier on reports that the company was poised to announce the talks, and they ended the day 7.8 percent higher.
In the talks, the Leverkusen-based group said it would address safeguarding its “future- and sustainability-oriented corporate strategy.”
Covestro CEO Markus Steilemann said ADNOC’s interest in the German firm “underlines our strong position as one of the world’s leading manufacturers of high-quality polymer materials and as a leader in the shift towards a circular economy”.
The German firm has expertise in areas such as chemical recycling that are key for the future of the industry, and which ADNOC is interested in.
The talks come as the vital German chemicals industry, which accounts for about five percent of the country’s GDP, is gripped by crisis.
The energy-intensive sector was hit hard after Russia invaded Ukraine and slashed deliveries of crucial natural gas to Germany.
