Abu Dhabi National Oil Company (ADNOC) is moving closer to its acquisition of Germany-based Covestro AG (DE:1COV). According to the Financial Times, ADNOC is expected to make its formal offer for $15.9 billion (€14.4 billion). The move follows concrete negotiations between the companies in June. Both ADNOC and Covestro declined to respond.
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Covestro shares gained nearly 2% as of writing. Year-to-date, Covestro stock has risen 7%.
Covestro is a German manufacturing company that specializes in polymers and caters to multiple industries. Meanwhile, ADNOC is a state-owned oil company in the UAE.
ADNOC to Acquire Covestro
ADNOC has been eyeing Covestro for over a year now. However, Covestro opened its books and engaged in formal discussions only in June this year. Covestro stated at that time that both companies were aligned on key aspects of a potential transaction, including support for Covestro’s future growth prospects.
In June, ADNOC increased its offer to €62 per share for Covestro, up from the previous €60 per share.
If the deal is finalized, it would mark a Gulf state-owned entity’s first successful acquisition of a German Dax 40 company. Two weeks ago, Reuters reported that ADNOC has largely finished its due diligence on the planned acquisition and a final offer is expected in September.
Is Covestro Stock a Buy?
Amid all the acquisition drama, analysts are cautiously optimistic about Covestro stock. According to TipRanks, 1COV stock has received a Moderate Buy rating based on seven Buy and six Hold recommendations. The Covestro share price forecast is €57.84, which is 3% above the current trading levels.
Recently, analyst Geoff Haire from UBS maintained a Hold rating on the stock, predicting a downside of 7.5%.
