Abu Dhabi's ADNOC has struck a deal to buy German chemicals maker Covestro (1COV.DE), opens new tab for 14.7 billion euros ($16.3 billion), including debt, in the energy giant's biggest ever acquisition.
The deal is one of the largest foreign takeovers by a Gulf state as countries in the region seek to reduce their dependence on oil amid the global switch to cleaner energy.
It also comes at a sensitive time in Germany for foreign acquisitions, as Commerzbank and the government seek to fend off interest in the bank from Italy's UniCredit.
The 62 euros-per-share cash deal, which will also see ADNOC take on about 3 billion euros in debt, follows protracted negotiations and is a cornerstone of the energy giant's drive to grow in petrochemicals along with gas and renewable energy.
ADNOC said that when the transaction closes it would also buy 1.17 billion euros worth of new shares in Covestro to improve funding at the former Bayer (BAYGn.DE), opens new tab unit.
"We believe that the fundamentals of chemicals are strong," Khaled Salmeen, ADNOC head of downstream, marketing, and trading, told Reuters, adding he saw Covestro as a platform for growth.
"This sector, and specifically Covestro's space in the sector, will grow higher than GDP from now to 2050," he added.
Shares in Covestro, which makes plastics and chemicals for the automotive, construction and engineering sectors, jumped 3.7% to a three-year high of 58 euros.
ADNOC has also been in talks with Austria's OMV to merge their petrochemical joint ventures Borealis and Borouge. ADNOC took a 24.9% stake in OMV from Abu Dhabi sovereign fund Mubadala in February.
Covestro was created in 2015 after being spun off from Bayer. It opened its books to ADNOC in June - a year after ADNOC's initial interest was reported.
The takeover offer will be subject to a minimum acceptance threshold of 50% plus one share of Covestro's capital.
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