Adnoc’s €12 Billion Covestro Deal Faces Likely In-Depth EU Probe - Bloomberg
Abu Dhabi National Oil Co.’s €11.7 billion ($13.7 billion) takeover of Covestro AG is facing the prospect of an in-depth European Union investigation, under powers that can curb influential foreign investment into the region.
EU regulators are preparing the probe under its powerful Foreign Subsidies Regulation by the end of the month, according to people familiar with the matter. Regulators are concerned that Adnoc’s heavy state backing could allow it to distort European markets and hamper fair competition across the bloc, the people said, adding that the EU’s decision was still in draft form and might change.
The European Commission currently has a deadline of July 28 to escalate the probe. The Brussels-based executive declined to comment. Representatives at Adnoc and Covestro didn’t immediately respond to requests for comment.
The escalation sends a strong signal that EU regulators are increasingly wary of large Middle Eastern-backed deals of European companies. The planned takeover gives Adnoc — the biggest oil producer in the United Arab Emirates — control over Covestro, a German company that supplies materials for some of the world’s most prominent phone and carmakers.
Last year, Abu Dhabi’s Emirates Telecommunications Group Co PJSC was forced to sign up to commitments that removed an unlimited state guarantee, in order to win EU approval for its €2.2 billion acquisition of PPF Telecom Group assets.
Under the EU’s foreign subsidies rules, the bloc has powers to vet subsidies that can distort European markets, and could issue fines, orders to suspend tenders or outright blocks of state takeovers.
Aside from acquisitions, the EU has wielded its tool largely against Chinese involvement in European markets across rail and clean energy sectors. Regulators raided the premises of Nuctech — a Chinese security equipment company with sites in the Netherlands and Poland.
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