EU Imposes Strict Conditions on Covestro's Takeover by Abu Dhabi's ADNOC

EU clears ADNOC's Covestro takeover with strict conditions on patent licensing and state subsidy oversight, setting a precedent under new foreign subsidy rules.

European competition regulators have laid out the specific requirements that must be met for the multi-billion euro sale of the Leverkusen-based polymer group Covestro to proceed. The published conditions reveal Brussels's strategy for preventing future market distortions stemming from foreign state subsidies, setting a precedent for similar deals.

A Challenging Backdrop for European Chemicals

The European Commission explicitly cited the difficult market environment as a key factor in its review. The continent's chemical sector continues to grapple with persistently weak demand, significant structural overcapacity, and elevated energy costs. In this context, the authority did not block a planned immediate capital injection of €1.17 billion, a central component of the acquisition agreement. Internal Covestro documents submitted during the investigation underscored the urgent need for fresh investment capital at this stage.

Patent Licensing at the Heart of Concessions

The investigation, conducted under the EU's new Foreign Subsidies Regulation (FSR), focused on financial advantages available to the buyer from Abu Dhabi. The Commission identified state guarantees that enabled ADNOC to submit a higher offer than a purely private investor could have made. To secure regulatory approval, the state-owned oil giant was compelled to agree to far-reaching concessions.

A core requirement obligates ADNOC to grant EU-based producers market-rate licenses for Covestro's existing and future sustainability patents. Only eight specifically named competitors are exempt from this rule. Furthermore, the company must amend its corporate statutes to align with the standard insolvency law of the United Arab Emirates. An independent monitoring trustee will be appointed to ensure ongoing compliance with these conditions.

The Final Chapter on the Stock Exchange

With the regulatory framework now clear, the formal departure from public markets is proceeding as scheduled. ADNOC, through its entity XRG, already controls 95.1% of Covestro's shares. Regular market forces have effectively been suspended, evidenced by an extremely low 30-day volatility of just 3.17%. The share price showed little movement yesterday, closing at €59.96.

Investors are now primarily awaiting the valuation from an independent auditor. The final act of this stock market story will be the squeeze-out at the Annual General Meeting on May 19, 2026, where remaining shares will be transferred to the majority shareholder for a determined cash settlement. The delisting from the regulated market will occur two weeks earlier, on May 5, 2026.