Abu Dhabi National Oil Company (ADNOC) is preparing to increase its initial takeover bid for German company Covestro AG, and offer concessions, in order to pave the way for the start of the due diligence process, people familiar with the matter said.
State-owned ADNOC aims to make a new offer of 60 euros per share as soon as within the coming days, which would value Covestro at about 11.3 billion euros ($12.3 billion), according to the people, who requested anonymity because the information is private, and added. The Emirati company plans to pledge functional guarantees for several years, in addition to about $8 billion in investments, after completing the deal.
Deliberations are still ongoing, and ADNOC may choose to wait until the new year to send its revised offer, the people noted. Representatives of the Emirati company and Covestro declined to comment.
The two sides began talks in September, after informal bids of 55 and 57 euros per share, which Covestro considered too low. Covestro shares have risen 45% this year, to €53, valuing the company at €10 billion.
Other acquisitions
ADNOC's pursuit of Covestro is part of oil producers' efforts to diversify their resources away from crude oil, a strategy followed by other companies in the Middle East as well.
ADNOC has offered to buy a stake in Brazilian petrochemicals company Braskem, and is finalizing a deal with Austria's OMV to create a petrochemicals company worth more than 30 billion euros.
Covestro, which was spun off from Bayer AG in 2015, makes foams used in car seats and mattress components, and polycarbonate used in medical devices. Bloomberg News first reported in June that ADNOC had expressed initial interest in acquiring the Leverkusen-based company.
