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Adnoc considers increasing Covestro bid to $12.6bn

Covestro says any agreement will require the approval of the respective boards and the approval of the competent authorities

Abu Dhabi National Oil Co (Adnoc) has verbally signalled to Covestro that it could raise its informal offer to €60 per share if the German plastics and chemicals maker agrees to enter formal talks, two people familiar with the matter told Reuters.

This would boost the oil giant’s non-binding bid to about €11.6 billion ($12.63 billion), the people said.

The indication of a raised offer is, however, not in writing, the people cautioned, adding that Covestro will take time to consider any next steps.

Adnoc last raised its informal offer to €57 per share in July. Considerations are still in progress and no final decision has yet been made, the people said, speaking on condition of anonymity.

Covestro and Adnoc declined to comment.

Covestro shares jumped about 4.2 percent in a volume spike after Bloomberg News first reported that Adnoc was prepared to sweeten its offer.

An offer at €60 per share would represent a premium of around 29 percent to Covestro’s closing share price on Friday.

Adnoc is separately in talks with Austria’s OMV regarding a possible merger of two companies backed by them to form a business worth more than $30 billion.

Earlier in August, Covestro reported a 21 percent fall in revenues to €3.7 billion in the second quarter. It forecast no improvement in demand this year and expects annual core profit at the lower end of its range as customers continue to de-stock amid high inflation.

Like other firms in Germany’s chemicals sector, the producer of foam chemicals used in mattresses, car seats and insulation for buildings, is facing a substantial drop in order volumes.