EU Launches Probe into Adnoc’s €12 Billion Covestro Takeover

UPDATE: The European Union has just launched a major investigation into Abu Dhabi National Oil Co.’s (Adnoc) planned takeover of Covestro AG, valued at nearly €12 billion (approximately $14 billion). This urgent probe, announced today, raises significant concerns over potential foreign subsidies that could distort competition in the EU market.

EU regulators are scrutinizing whether state funding from the United Arab Emirates (UAE) has given Adnoc unfair advantages in pursuing the acquisition of Covestro, a German materials supplier crucial to major global brands in the phone and automotive sectors. The investigation centers on allegations that an unlimited financial guarantee from the UAE may have enabled Adnoc to secure Covestro under terms not reflective of true market conditions.

The EU’s new Foreign Subsidies Regulation, which came into effect recently, aims to ensure fair competition within the bloc, and this case marks a pivotal moment in how foreign investments are evaluated. The European Commission has set a deadline of December 2 to reach a ruling, signaling a tightening grip on large-scale transactions involving Middle Eastern investments.

This escalation reflects a broader trend of increased scrutiny by EU regulators, particularly regarding investments from the Middle East. Just last year, Abu Dhabi’s Emirates Telecommunications Group Co PJSC was compelled to make concessions to secure approval for its €2.2 billion acquisition of PPF Telecom Group assets, including relinquishing unlimited state guarantees.

Should the investigation conclude that Adnoc has violated EU regulations, the takeover could face outright rejection unless significant adjustments are made. This is a developing story with implications not only for Adnoc and Covestro but also for future foreign investments in Europe.

As the EU continues to wield its foreign subsidy powers, it has predominantly targeted Chinese involvement in critical sectors such as rail and clean energy. This latest probe into Adnoc serves as a crucial reminder of the evolving landscape of international business regulations, where compliance is becoming increasingly complex and demanding.

Stay tuned for more updates as this story unfolds, impacting both the global oil market and the competitive landscape of European industries.