Business operations continue for Covestro, despite ADNOC's takeover and ongoing European Union review
The European Commission has launched an in-depth review of the planned €12bn ($14.1bn) takeover of the Leverkusen-based chemical company Covestro by the Arab oil giant Adnoc. The investigation, under the Foreign Subsidies Regulation (FSR), was initiated due to "preliminary concerns" that subsidies from the UAE to Adnoc could potentially distort competition in the EU internal market.
The review follows a preliminary probe and aims to conclude with a decision by December 2, 2025. Adnoc's subsidiary XRG and Covestro remain in constructive and cooperative discussions with the European Commission throughout this process.
Initially, the EU Commission cleared the deal from a competition perspective in May 2025, but later flagged potential foreign subsidies, such as an unlimited UAE government guarantee and a capital increase committed by Adnoc, that might have enabled Adnoc to acquire Covestro under financial terms not aligned with market conditions. These concerns have led to the current in-depth probe focused mainly on the acquisition process and whether the subsidies give Adnoc a competitive advantage in the EU market.
Regarding Covestro's financial performance, the in-depth investigation timeline extends until early December 2025, and the transaction is still expected to close in the second half of 2025, contingent on regulatory approval.
Covestro's Chief Financial Officer, Christian Baier, has expressed no new uncertainty regarding the EU review and has called on the German government to strengthen investments in Germany. Baier also stated that Covestro does not see any short-term recovery and continues to express confidence in the completion of the takeover in the second half of the year.
In summary, while Adnoc’s takeover of Covestro is under intensified scrutiny by the EU Commission due to concerns over foreign subsidies, discussions remain constructive, and the deal has not been blocked but is subject to a pending decision that will weigh heavily on potential subsidy distortions and market competition within the EU.
The internal review by the European Commission, centering on the proposed €12bn takeover of Covestro, is primarily focused on the potential effects of Adnoc's subsidies from the UAE on competition within the EU industry and finance, as well as the business implications for Covestro given the extended in-depth investigation timeline.
Despite these ongoing investigations, Covestro's Chief Financial Officer, Christian Baier, has maintained confidence in the completion of the takeover by Adnoc's subsidiary XRG, contingent on regulatory approval, signifying the importance of business continuity and the significance of the transaction within the broader EU market.
