Adnoc's XRG clears final hurdles for Covestro takeover after EU, German approvals

Dubai: Adnoc's XRG has received the last regulatory clearances for its acquisition of Covestro AG, marking a significant milestone after nearly a year of scrutiny under multiple EU review processes. 

With Germany’s Federal Ministry for Economic Affairs and Energy approving the transaction under its foreign direct investment regime — and the European Commission granting clearance under the EU Foreign Subsidies Regulation (FSR) on November 14 — the deal is now set to close in the coming days.

The offer was launched through ADNOC International Germany Holding AG, XRG’s indirect wholly owned subsidiary. Both EU and German authorities examined the financing structure, ownership links and state-backing profile behind the bid. Their approvals remove the final conditions tied to the voluntary public takeover, allowing the transaction to proceed.

XRG sees the acquisition as a step toward expanding its presence in global chemicals and materials. Covestro adds scale through 46 production sites, 13 research centres and 17,500 employees. The company produces more than 10,000 polymer materials used across mobility, electronics, construction, renewable energy and other industries.

Milestones leading to approval

The latest clearances follow a series of regulatory steps that shaped the trajectory of the deal:

• In May, the European Commission granted unconditional antitrust approval, finding no competition concerns because the companies operate in different segments of the chemicals supply chain.

• In July, the Commission opened an in-depth investigation under the FSR to assess whether financial support from the UAE may have provided XRG an advantage over other potential bidders. The review examined guarantees and capital structures tied to ADNOC before concluding with the FSR approval issued on November 14.

These processes turned the transaction into an early test of the EU’s approach to state-backed foreign acquisitions in strategic industries.

How XRG plans to use Covestro

XRG expects Covestro to enhance its exposure to long-term growth themes such as the energy transition, circular manufacturing and materials that support artificial intelligence and digital infrastructure.

Dr. Rainer Seele, President of Global Chemicals at XRG, said the approvals allow the company to move forward with a long-term partnership built on Covestro’s technical strengths. He said the deal supports XRG’s ambition to become one of the top three global chemicals investors.

Covestro CEO Dr. Markus Steilemann called the acquisition an opportunity to accelerate digitalisation, expand circular solutions and advance the company’s strategy for next-generation materials. He said both companies share long-term priorities that position the business for growth.

Continuity under new ownership

Covestro will remain headquartered in Leverkusen and led by its current management team. XRG said it will maintain existing employee agreements, including collective bargaining and co-determination structures. 

Both sides will explore ways to strengthen operational efficiency and resilience as Covestro enters a new phase of investment.

With all conditions in the October 25, 2024 offer document now satisfied, XRG plans to complete the transaction shortly.