Freshfields Advises Abu Dhabi Oil in €14.7B Covestro Deal.

Abu Dhabi's state-owned oil enterprise, Adnoc, declared on Tuesday its intention to purchase the German chemical manufacturer Covestro AG in a transaction valued at €14.7 billion ($16.3 billion). This strategic acquisition aligns with the Gulf nation's efforts to diminish its dependence on oil and promote its objectives in green energy.

Adnoc has announced its intention to acquire Covestro through a voluntary public takeover offer. The company has entered into an investment agreement that proposes a price of €62 per share for Covestro's shareholders, resulting in a total transaction value of €14.7 billion, which encompasses €3 billion in debt.

This initiative aligns with Adnoc's strategic goal of establishing itself as a prominent player in the global chemicals industry. To support this acquisition, Adnoc has appointed Freshfields Bruckhaus Deringer LLP as its legal counsel, while Covestro's management board is receiving guidance from Linklaters LLP. Additionally, the supervisory board of Covestro is being represented by the German law firm SZA Schilling Zutt & Anschütz.

Strategic Initiative for International Expansion

This agreement marks a notable strategic transition for Adnoc as it moves away from conventional oil investments to establish a strong foothold in the chemical sector. Covestro, which was separated from the German pharmaceutical leader Bayer in 2015, will be the foundation of Adnoc’s materials and specialty chemicals division. Adnoc intends to enhance its investment by acquiring 18.9 million new shares of Covestro for €1.17 billion, utilizing its current cash reserves to finance this purchase.

A consortium of leading financial and legal advisors is managing the transaction. Morgan Stanley is acting as the financial advisor for Adnoc, whereas Covestro’s board of management is being advised by Goldman Sachs and Perella Weinberg Partners. Additionally, Rothschild & Co. and Macquarie Capital are providing counsel to Covestro’s supervisory board. While a precise timeline has not been disclosed, both companies express confidence in the successful completion of the deal, subject to regulatory and shareholder approvals.