2023-09-08 21:09:02
After weeks of speculation, the chemical company Covestro is open to a takeover by the oil company Abu Dhabi National Oil (Adnoc). The Covestro board decided to start open-ended discussions in view of Adnoc’s expressed interest, as the DAX group announced on Friday evening. This means that both companies can now discuss details of a possible acquisition. Recently there was talk in the media that the Arabs had informally promised 60 euros per share, which corresponds to a value of 11.6 billion euros.
How high an offer would have to be in order to receive Covestro’s approval remains an open question. “It remains to be seen whether, in what form and, if necessary, under what conditions an agreement will be reached between the discussion partners,” emphasized the Leverkusen-based company.
The Covestro shares last cost 52.82 euros on the Tradegate trading platform. In doing so, they further increased their profits from the Xetra main shaft by almost eight percent to 51.50 euros. The Bloomberg news agency had already reported in the afternoon that Covestro was likely to be open to talks this week. The share price then skyrocketed.
So far, the board has not wanted to comment on speculation
There has been speculation about Adnoc’s interest since mid-June, when the shares cost around 40 euros. Since then, the management around Covestro boss Markus Steilemann had avoided any concrete comment on the topic and repeatedly said that speculation would not be commented on. According to reports, both sides have not yet spoken to each other directly, but have only communicated informally through investment banks and lawyers.
Analyst Markus Mayer from Baader Bank has had Covestro on his list as a takeover target for over a year. The company’s valuation was below the amount that would be needed to rebuild all production facilities. The company also impresses with its sophisticated technology and cost leadership in production. Since July, Mayer has also taken into account a possible takeover at a price of 70 euros per share when valuing the shares.
The reason for the price decline until the Adnoc rumors emerged was initially the global delivery bottlenecks and production problems in the corona pandemic and most recently the sluggish global economy. The plastics company felt the weakness of the construction industry and the reluctance of many consumers to buy consumer electronics, household appliances and furniture.
Weak construction activity has an impact on the entire group
If these areas weaken, demand for the company’s rigid and soft foam precursors, which are processed into insulation material, upholstery and the like, also slackens. And hard plastics, polycarbonates, for example for laptop and smartphone casings, will then be less in demand.
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For analyst Sebastian Satz from the British investment bank Barclays, the rumored 60 euros per share is also rather low. However, the amount could be sufficient to start takeover talks, since the plastics group’s shares have rarely traded above this level in the recent past, the expert explained in mid-August.
Adnoc has been expanding its involvement in the chemical business for some time. The company produces almost all of the oil for the United Arab Emirates. He has $150 billion in investment plans to expand his natural gas, chemicals and clean energy businesses worldwide.
The oil producers in the Persian Gulf want to put their business, which has previously focused on the sale of crude oil, gasoline and diesel, on a broader basis. Adnoc is also trying to improve its position in competition with the oil company Saudi Aramco. Last year, Adnoc had already acquired shares in the Austrian oil and gas group OMV.
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