Abu Dhabi National Oil Company (ADNOC) is on the verge of securing European Union approval for its proposed €14.7 billion ($17 billion) takeover of German chemicals maker Covestro, people familiar with the matter told Reuters.
The European Commission, the EU’s competition regulator, is expected to greenlight the deal in the coming weeks, marking a major milestone for the state-owned oil giant’s global expansion strategy.
The Commission restarted its investigation on October 24, after temporarily pausing the process on September 3 while awaiting additional information from the companies. A new March 2 deadline has been set for a final decision, though insiders suggest the approval could come as early as mid-November, barring last-minute objections.
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026): big discounts for early bird.
Tekedia AI in Business Masterclass opens registrations.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab: From Technical Design to Deployment (next edition begins Jan 24 2026).
The proposed deal — ADNOC’s biggest-ever acquisition — is one of the largest foreign takeovers of an EU industrial firm by a Gulf state-backed company, highlighting the growing influence of Middle Eastern sovereign wealth and state enterprises in Europe’s industrial and energy landscape.
Addressing EU Competition and State Aid Concerns
The transaction, which has been under review since the summer, has faced scrutiny from EU officials concerned that ADNOC’s deep state backing could distort competition within the European market. The company is fully owned by the Abu Dhabi government and benefits from an implicit state guarantee, which Brussels feared could give ADNOC an unfair advantage over private rivals when financing major acquisitions.
To allay these concerns, ADNOC offered to amend its articles of association, introducing safeguards that limit its reliance on unlimited state support. It also pledged to retain Covestro’s intellectual property, research facilities, and patents in Europe, ensuring the German company’s technology and innovation base remains under EU jurisdiction.
Sources told Reuters that ADNOC later fine-tuned these commitments following consultations with competitors and major customers of Covestro. The changes were reportedly well received by the Commission, paving the way for a positive decision.
“XRG does not comment on ongoing regulatory matters and continues to engage constructively with the Commission,” ADNOC’s international investment arm said in a statement to Reuters.
If approved, the acquisition would mark a strategic milestone for ADNOC’s global diversification drive, as the Gulf energy powerhouse pushes into downstream industries such as petrochemicals and advanced materials. The move aligns with Abu Dhabi’s broader vision to diversify its economy beyond crude oil exports, using its state-owned companies to secure long-term industrial assets across Europe and Asia.
The deal also mirrors a wider investment wave by Gulf sovereign funds and energy companies seeking opportunities in Europe’s energy transition. Earlier in 2024, Saudi Aramco acquired a 10% stake in China’s Rongsheng Petrochemical, while QatarEnergy expanded its LNG investments into Germany and Italy.
The Covestro acquisition represents a bid for ADNOC to become a global leader in chemicals and materials, areas that complement its existing strengths in refining and low-carbon energy. Covestro’s expertise in sustainable polymers and circular materials fits neatly into ADNOC’s strategy to reduce emissions and enter higher-value markets.
Covestro’s Struggles and the Path to Takeover
Covestro, based in Leverkusen, Germany, produces high-performance plastics used in automotive manufacturing, construction, electronics, and consumer goods. The company has struggled in recent years amid volatile raw material prices, energy shocks following Russia’s invasion of Ukraine, and weakening global demand.
In June 2024, Covestro’s board entered formal negotiations with ADNOC after months of informal talks that began in 2023. ADNOC initially proposed a €11 billion valuation but raised its offer several times before reaching the current €14.7 billion figure. Analysts have noted that the increased bid reflects both Covestro’s strategic value and ADNOC’s strong financial capacity, buoyed by Abu Dhabi’s massive oil revenues.
The deal also underscores Europe’s growing openness to Gulf investment despite concerns over state funding. European policymakers are balancing the need for foreign capital with growing caution over state-owned entities acquiring critical assets, particularly in chemicals, energy, and technology.
If the Commission gives the green light this month as expected, the deal would proceed to closing in early 2026, pending national regulatory approvals in Germany and other EU member states. Covestro shareholders would then vote to finalize the transaction.
Once completed, the takeover would position ADNOC as a major global chemicals player, capable of competing with industrial giants such as BASF, Dow, and SABIC. It would also provide ADNOC with a stronger European foothold and access to technologies essential for developing more sustainable and recyclable materials.
The European Commission’s upcoming ruling will be closely watched across global markets. Analysts say it will serve as a litmus test for how the EU handles large-scale acquisitions by state-backed companies in strategic industries — and how far Europe is willing to open its doors to Gulf capital while preserving competition and sovereignty.