Covestro Prepares for Formal Talks on $12 Billion Adnoc Bid - Bloomberg

Covestro Prepares for Formal Talks on $12 Billion Adnoc Bid - Bloomberg

Covestro AG’s supervisory board is meeting on Friday to discuss giving its blessing to formal deal talks with Abu Dhabi National Oil Co., people familiar with the matter said.

A decision to entertain Adnoc’s takeover approach would pave 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 stock was up 10% at 3:11 p.m. in Frankfurt, giving the company a market value of €10.2 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, the people said.

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.

Deliberations are ongoing, and there’s no certainty they will lead to a transaction, the people said. Representatives for Covestro and Adnoc declined to comment.