EU launches ‘in-dept’ probe into Adnoc’s €12bn Covestro bid

Brussels – The European Commission has launched an in depth investigation into a €12 billion deal by Abu Dhabi National Oil Co. (Adnoc) to take over German chemicals group Covestro. (ERJ report)

In a 28 July statement, the Commission cited concerns that subsidies from the United Arab Emirates may have tilted the deal in Adnoc’s favour.

The Commission said it had “preliminary concerns” that Adnoc may have received foreign subsidies which could have “distorted the outcome of the acquisition process.”

These, it said, include “an unlimited guarantee” from the UAE and “a committed capital increase by Adnoc into Covestro.”

“The foreign subsidies may have enabled Adnoc to acquire Covestro at a valuation and financial terms that would not be in line with market conditions, and which could not have been matched by unsubsidised investors,” it said.

The probe will examine whether the alleged subsidies influenced the outcome of the bidding process, possibly deterring other investors.

It will also investigate whether the subsidies “may lead to negative effects in the internal market with respect to the merged entity's activities after the transaction.”

The transaction was notified to Brussels on 15?May.

Under the ‘foreign subsidies regulation’, the Commission now has 90 working days – until 2?Dec – to reach a decision.