Adnoc-CIO assures Covestro it can operate independently
Abu Dhabi National Oil Company (Adnoc) has given assurances to plastics giant Covestro that management will maintaining their independence following the planned multi-billion euro acquisition. „We have full confidence in the management's decisions“, says Klaus Fröhlich, Adnoc Chief Investment Officer told Börsen-Zeitung. With regard to workforce commitments, he added that "we will respect whatever agreements management negotiates with the workforce.“ Covestro recently excluded operational layoffs until 2032.
„To understand and feel comfortable in the world of German co-determination certainly takes time“, says Fröhlich. „But this is not unusual either. M&A requires patience and discipline. Trust is not gained through force.“ Naturally, Adnoc respects „how co-determination works on German supervisory boards.“
State-owned with deep pockets
Adnoc has 150 billion dollars available for investments. It is offering 14.4 billion euros for Covestro, including assumption of debt, and has begun due diligence. The proposed 62 euros per share represents a 60% premium over the June 2023 share price. This acquisition would not only be the largest M&A deal in Europe this year, but also the first complete acquisition of a DAX company by a state-owned company from the Gulf.
Consequently, the transaction is being closely observed. This is especially true as the Abu Dhabi Investment Authority (ADIA) and the Saudi logistics company Bahri are also currently involved in the bidding for DB Schenker, the rail logistics subsidiary.
„Our reliability as an energy supplier and our respectful approach are appreciated – this opens doors for us“, states Fröhlich.
Adnoc already holds stakes in Austrian companies, which according to Fröhlich, do not overlap with Covestro. The petrochemical company Borealis in Vienna is 75% owned by OMV, and since April 2022 25% by Adnoc. And Abu Dhabi-listed Borouge is 54% owned by Adnoc, with 36% belonging to Borealis, which is set to merge with Borouge.
As a Morgan Stanley banker in Frankfurt in 2015, Fröhlich took the then Bayer subsidiary Covestro public. He moved to Adnoc in 2020. Now he is launching a takeover bid for Covestro from there. „I would never have dreamed of it," he says.
However Fröhlich does not rule out that deal deal might not be completed. happen. „There's no automatic outcome – we're not doing M&A at any cost," he says. "In Brazil, our acquisition of Braskem, a petrochemical company producing thermoplastic resins, didn't materialise after lengthy negotiations.“
