Abu Dhabi's ADNOC to buy German chemicals firm Covestro for $16.4B

Abu Dhabi state oil giant said it has agreed to buy German chemicals producer Covestro for 15.9 billion euros including debt, sending Covestro shares up 4% in early trade, Report informs referring to RTE.

The deal represents one of the biggest foreign takeovers by a Gulf state as Abu Dhabi and other countries in the region seek to reduce their economies' heavy dependence on oil in the face of the global energy transition.

It follows protracted negotiations between the two companies and will see ADNOC pay 62 euros per Covestro share, equal to 14.7 billion euros including about 3 billion euros in debt.

Adnoc added it would also buy 1.17 billion euros worth of new shares in Covestro, a former Bayer unit, from a capital increase to improve funding of the takeover target.

The deal marks a cornerstone for ADNOC's plans to grow its petrochemicals business along with gas and renewable energy.

ADNOC has also been in talks with Austria's OMV for more than a year to merge their petrochemical joint ventures Borealis and Borouge. ADNOC took a 24.9% stake in OMV from Abu Dhabi sovereign fund Mubadala in February.

Covestro, which makes plastics and chemicals for the automotive, construction and engineering sectors, was created in 2015 after being spun off from Bayer. It opened its books to ADNOC in June - a year after ADNOC's initial interest was reported.