M&As: Covestro management approves US$16 bn takeover by Adnoc; Hexpol acquires major share in Piedmont Resin for US$86 mn

German materials firm Covestro has said its management and supervisory boards support Abu Dhabi National Oil Company (Adnoc)’s US$16.3 billion takeover offer.

"The offer made by Adnoc International therefore provides shareholders with an attractive opportunity to realize significant value already upon completion of the transaction," the company said in a statement.

The company also added, “It is the view of the Board of Management and the Supervisory Board that Covestro, with the strategic support of Adnoc International, will be able to build on an even stronger foundation for sustainable growth in highly attractive sectors and can therefore make an even greater contribution to the green transformation.”

Covestro and Adnoc International have agreed on a long-term strategic partnership. The basis for this partnership is the Investment Agreement signed on October 1, 2024, which runs until the end of 2028. In the Investment Agreement, both companies have agreed on the main cornerstones of the partnership. In particular, the agreement contains several commitments on the part of Adnoc International to maintain Covestro's existing business activities, corporate governance and organisational business structure.

To enable growth, Adnoc will also subscribe to new Covestro shares issued in connection with an increase of the company’s share capital by 10% upon the completion of the transaction at the offer price, resulting in an amount of EUR1.17 billion proceeds at an offer price of EUR62.

Closing of the transaction not expected before second half of 2025 and the offer is subject to minimum acceptance level of 50% plus one share, along with customary closing conditions.

In other news, Swedish materials firm Hexpol has signed an agreement to acquire 80% of the shares in Piedmont Resin Supply, a US-based nylon compounder. The acquisition price amounts to US$86 million on a cash and debt free basis and is funded by a combination of bank facilities and cash. The closing took place on October 31, 2024.

Pursuant to the agreement, Hexpol adds it has an option to acquire the remaining shares, and the founders have an option to sell their remaining shares to Hexpol.

Piedmont was founded in 2013 by Matt Griffith and Paul Daniel and has grown to become one of the largest independent nylon compounders in the US. The company is an industry leader in technical nylon compounds on the US market and services a variety of customers within automotive, transportation and the furniture industries.

Piedmont operates a manufacturing facility in Cartersville, GA with some 60 employees and further capacity to grow. The company has a turnover of some US$60 million and a profitability on a similar level to the Hexpol Group, it stated.

“The acquisition of Piedmont adds new capabilities, application knowhow and a new customer base to Hexpol Thermoplastic Compounding in the US,” said Jan Wikström, President Hexpol Thermoplastic Compounding

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