ADNOC’s Record Acquisition of Covestro Stake

The Abu Dhabi National Oil Company (ADNOC) has completed a major strategic acquisition of German chemical company Covestro, marking the largest foreign investment ever made by a UAE-owned firm. Through its international investment platform XRG, ADNOC secured a roughly 9.5 per cent direct stake in Covestro as part of a wider takeover transaction valued at nearly €15 billion.

The deal significantly expands ADNOC’s global footprint beyond traditional oil and gas. It also positions the company in high-value chemical materials and advanced industrial inputs.

This acquisition represents a historic milestone for ADNOC and reflects the UAE’s broader ambition to diversify its economy and secure future-oriented strategic assets. This article examines the structure of the deal, the regulatory approvals behind it, and its implications for ADNOC, Covestro and the global chemicals industry.

What the Acquisition Involves

ADNOC structured the acquisition through its wholly owned investment vehicle, XRG P.J.S.C. The parties initially agreed to the transaction in late 2024. It then progressed through a series of regulatory reviews in Europe and Germany.

Final approvals came from the European Commission and the German Federal Ministry for Economic Affairs and Energy. With these clearances in place, ADNOC secured a substantial holding in one of Europe’s leading chemical materials companies.

Covestro operates across industries including automotive manufacturing, construction, electronics and consumer products. The company specialises in high-performance polymer materials used worldwide.

Covestro is headquartered in Leverkusen, Germany. It employs around 17,000 people and operates dozens of production sites globally. Its product portfolio includes polycarbonates and polyurethane materials used in coatings, adhesives and insulation systems.

All closing conditions under the agreement have now been met. The transaction is expected to close in the coming weeks. Following completion, Covestro plans a major capital increase to support growth and sustainability initiatives.

Regulatory Approval Journey

European and German regulators subjected the deal to extensive scrutiny due to its scale and strategic importance. The European Commission reviewed the transaction under its foreign subsidies regulation, which aims to prevent unfair competitive advantages from state-backed investments.

Regulators assessed whether ADNOC’s state ownership could distort competition in European markets. After detailed analysis, the Commission granted conditional approval.

The deal then required approval from Germany’s Federal Ministry for Economic Affairs and Energy. Authorities examined national security, industrial policy and investment impact concerns. They granted final approval in late 2025.

This process highlights the evolving landscape of international investment oversight, where regulators balance economic openness with competitive fairness.

Why Covestro Matters

Covestro ranks among the world’s leading suppliers of advanced polymer materials. Its products support key industries such as automotive manufacturing, building materials, electronics and consumer goods.

The company designs its materials for durability, efficiency and sustainability. Many applications support lightweight construction, energy efficiency and renewable technologies.

Covestro has committed to ambitious climate goals. These include achieving climate neutrality across direct and indirect emissions in the coming years.

By investing in Covestro, ADNOC gains access to fast-growing industrial value chains beyond fuels and raw hydrocarbons. These markets are expected to see strong long-term global demand.

Strategic Importance for ADNOC and the UAE

Expanding Beyond Oil and Gas

ADNOC has long ranked among the world’s leading oil producers. In recent years, it has accelerated diversification into petrochemicals, logistics and low-carbon solutions.

The Covestro acquisition marks a major step into advanced materials and industrial chemicals. This move aligns closely with the UAE’s national strategy to reduce reliance on hydrocarbon revenues.

By investing in a global industrial company, ADNOC strengthens long-term resilience and supports the UAE’s evolving economic model.

Enhancing Global Influence

Holding a major stake in a European industrial leader elevates ADNOC’s global position beyond energy markets. It opens pathways for technology partnerships, innovation and industrial collaboration across regions.

The deal also reinforces the UAE’s reputation as a sophisticated global investor in high-value strategic assets.

Implications for Covestro’s Future

With ADNOC as a strategic shareholder, Covestro gains access to new capital and long-term support. The planned capital increase of more than €1 billion will fund research, innovation and capacity expansion.

Covestro’s leadership has confirmed that day-to-day operations will remain independent. The company will continue to operate from its German headquarters under existing governance structures.

This approach aims to reassure employees, customers and partners while enabling growth through strategic alignment.

Global Chemical Industry Context

The chemicals industry underpins much of the global industrial economy. It supplies critical inputs for manufacturing, infrastructure, technology and consumer products.

Demand for advanced materials continues to rise due to electric vehicles, renewable energy systems and sustainable construction. Covestro operates at the centre of these trends.

Through this investment, ADNOC positions itself within a future-facing industrial sector shaped by innovation, energy transition and sustainability.

Challenges and Considerations

Large cross-border acquisitions bring complexity. Regulators apply strict competition, subsidy and security frameworks, as seen during this transaction.

Cultural integration and regulatory alignment across regions also require careful management. However, the strategic fit between ADNOC’s diversification goals and Covestro’s growth strategy supports collaboration.

Global economic conditions, supply chains and geopolitical developments may influence long-term outcomes. Both companies will need flexible strategies to manage future risks.

Looking Ahead

With regulatory approvals complete and closing imminent, focus will shift to execution. Observers expect increased investment in research, sustainability and global expansion.

For ADNOC, the deal marks a decisive shift toward integrated industrial growth. For Covestro, it provides capital and strategic backing to accelerate transformation.

Industry analysts will closely watch how this partnership reshapes competition in the global chemicals market.

Conclusion

ADNOC’s acquisition of a major stake in Germany’s Covestro represents a landmark moment for the UAE’s global investment strategy. The deal extends ADNOC’s reach beyond oil and gas into advanced materials and industrial chemicals.

By securing regulatory approvals and completing the transaction, ADNOC demonstrates its ability to compete in complex international markets. The partnership supports long-term goals of diversification, innovation and sustainable growth.

As the transaction closes and new investments begin, this acquisition will stand as a defining chapter in the evolution of both ADNOC and Covestro — and in the wider global industrial landscape.