European Union (EU) antitrust authorities are preparing to halt their investigation into Abu Dhabi state oil giant ADNOC’s €14 billion (approximately $17 billion) bid for the German chemicals company Covestro. This decision would give the European Commission additional time to gather more information about the agreement.
The international investment arm of ADNOC (Abu Dhabi National Oil Company), XRG, said that some of the Commission’s information requests appear irrelevant to the deal.
“Clearly, if such a decision were taken, we would be very disappointed. Some of the information requests are unreasonably broad and unrelated to this transaction. That said, we are committed to finding a constructive path forward so that the agreement can be concluded promptly,” an XRG spokesperson told Reuters, referring to the temporary halt in the EU investigation.
ADNOC’s acquisition of Covestro in October 2024 was the largest to date and marked one of the biggest foreign takeovers of an EU company by a Gulf state. Among Covestro’s products are foam chemicals used in car seats, mattresses, and building insulation.
The European Commission, which has been reviewing the deal under its foreign subsidies rules since May, conducted an in-depth investigation recently, while issuing a warning that subsidies granted by the UAE could distort the EU internal market. The probe, supposed to look into possible negative effects in the internal market resulting from the merged company’s activities once the deal is concluded, will be under the media limelight, as the Commission has set December 2 as the deadline for its decision on the deal.
Talking about Covestro, the German chemicals maker recently missed its second-quarter sales expectations, as US trade policies weighed on prices, but expressed confidence its takeover by ADNOC would be sealed by the end of 2025 despite EU hurdles.
Covestro, whose products include foam chemicals used in mattresses, car seats and insulation for buildings, said the clouds of United States higher tariffs had led to a huge oversupply of products to the market there, particularly from the Asia-Pacific region, which had then caused a big drop in prices.
The company’s revenues fell 8.4% to 3.38 billion euros (USD 3.86 billion) in April-June, missing analysts’ average estimate of 3.55 billion euros in a company-provided consensus.
“At the moment, demand is too weak to absorb the partial oversupply,” Chief Financial Officer Christian Baier told Reuters in an interview.
In July, Covestro cut its full-year earnings forecast for the second time this year. It now sees earnings before interest, taxes, depreciation and amortisation within a range of 700 million euros to 1.1 billion euros, down from a previously expected 1 billion euros to 1.4 billion euros.