EU approves UAE oil giant's purchase of Germany's Covestro

BRUSSELS,

The European Commission on Friday approved the takeover of German chemical firm Covestro by UAE state-owned oil company ADNOC, after the Emirati firm pledged measures to address competition concerns.

Covestro, a leading plastics manufacturer, accepted ADNOC’s October bid valuing the company at 12 billion euros ($14 billion). The EU had launched an investigation in August to assess whether UAE subsidies enabled ADNOC to outbid competitors and could distort the market through additional investment in Covestro.

ADNOC proposed remedies, including removing an unlimited UAE state guarantee in the event of insolvency and sharing Covestro’s sustainability-related patents with other market participants. The Commission granted approval “conditional upon full compliance with the commitments offered,” stating that these steps addressed potential negative effects on competition.

“We have carefully assessed the foreign subsidies involved in this transaction to ensure a fair and competitive internal market,” said EU competition chief Teresa Ribera. “Our review confirmed that the commitments offered by ADNOC effectively address the potential negative effects by allowing market participants to access key Covestro patents in the field of sustainability.”

Covestro’s acquisition comes as Germany’s chemical sector, which represents roughly five percent of the country’s GDP, faces ongoing challenges. High energy costs and weak demand following the 2022 Russian invasion of Ukraine have forced producers to reduce output.

ADNOC has committed to injecting approximately 1.2 billion euros into Covestro through the issuance of new shares under the takeover terms. Covestro, spun off from Bayer in 2015, had previously unveiled a cost-cutting plan to save around 400 million euros annually.