No cause for concern.
In a recent interview with Handelsblatt, Covestro's Chief Financial Officer, Christian Baier, expressed optimism that the takeover of the German chemical company by Abu Dhabi National Oil Company (Adnoc) can be completed in the second half of the year. However, Baier also acknowledged that trade issues have overshadowed any positive effects that were expected in the second half of the year.
The acquisition, valued at around €12 billion, was initially cleared by the European Commission on 13 May 2025 without competition concerns. However, the EU competition authority has now opened an in-depth investigation into Adnoc's acquisition of Covestro under the Foreign Subsidies Regulation (FSR). This follows a preliminary investigation that raised concerns about possible distortions of the EU internal market due to subsidies granted by the UAE, such as an unlimited guarantee and capital increases from Adnoc that might have enabled it to acquire Covestro under non-market conditions. The Commission is also concerned that Adnoc’s post-transaction investment strategies could affect competition within the EU market.
The investigation was formally notified to the Commission on 15 May 2025. After the preliminary review, the Commission initiated the in-depth probe at the end of July 2025 and aims to reach a decision by 2 December 2025. The outcome could be a no-objection decision, acceptance of commitments by the parties to address any distortions, or prohibition of the deal.
Adnoc’s subsidiary XRG and Covestro remain in constructive and cooperative discussions with the Commission, working towards concluding the review.
Meanwhile, Covestro's business development has been impacted by disappointing quarterly figures. However, Baier did not express optimism about a short-term recovery for Covestro's business development. He did mention that the recent EU review has not created any new uncertainty for Covestro.
In a surprising development, shareholders of Covestro can anticipate receiving 62.00 euros per share in the second half of the year, according to DER AKTIONÄR. This new information implies that the approval process for the Covestro-Adnoc takeover may take some time.
Despite the ongoing investigation, Baier did not view the recent EU-US trade agreement as a turning point for Covestro's business development. The specific conditions of the agreements related to the EU-US trade deal are yet to be determined, as per Baier's statements.
In summary, the current status of the Covestro-Adnoc takeover is an in-depth investigation under the EU’s Foreign Subsidies Regulation, with a focus on the impact of UAE subsidies on the acquisition and EU market competition. The expected timeline for a decision is targeted by 2 December 2025. Baier advises patience regarding the approval of the takeover by competition authorities.
The ongoing in-depth investigation under the EU's Foreign Subsidies Regulation has cast uncertainty over the timeline of Adnoc's acquisition of Covestro, valued at approximately €12 billion. The outcome of this investigation, set to be decided by 2 December 2025, could significantly impact the finance sector, as well as other businesses within the EU industry.
Regardless of the ongoing investigation, the recent EU-US trade agreement has yet to be defined in terms of its specific conditions and their potential effects on Covestro's business development, as per Baier's statements.
