Covestro approves takeover bid for ADNOC and lowers profit target

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Covestro said its board is likely to recommend a $16.3 billion takeover bid for Abu Dhabi National Oil Company (ADNOC) to shareholders in the next few weeks as the German chemicals maker again cuts its 2024 profit target.

Earlier this month, ADNOC said it had struck a deal to buy Covestro for $16.3 billion including debt, marking the energy giant’s biggest acquisition ever.

Covestro has until November 27 to accept the offer.

“Subject to consideration of the Offer Document, the Management Board and the Supervisory Board of Covestro anticipate that they will recommend acceptance of the Offer to the Company’s shareholders,” Covestro said in a statement. A statement on the takeover bid will be published “in the next two weeks.”

After the transaction is completed, it is possible that ADNOC will delist the German company, Covestro CFO Christian Bayer told Reuters.

The deal is one of the biggest foreign takeovers by a Gulf state as countries in the region seek to reduce their dependence on oil amid a global transition to cleaner energy.

The German group, whose main products include foams used in mattresses, car seats and building insulation, cut its main profit target for 2024 to between 1 billion and 1.25 billion euros for the second time this year, saying that global demand remains low.

Covestro previously forecast earnings before interest, taxes, depreciation and amortization (EBITDA) in 2024 of between €1 billion and €1.4 billion.

The company’s EBITDA rose 3.6% to 287 million euros in the July-September period, but fell slightly short of the average analyst estimate of 292 million euros provided by the company.

Covestro’s third-quarter sales were 3.60 billion euros, up 1% year-on-year but below the consensus estimate of 3.68 billion euros.

Read: ADNOC to buy German chemical company Covestro for $18 billion