ADNOC International Enters into Investment Agreement with Covestro and Announces Voluntary Public Takeover Offer

Press Release

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART) IN, INTO OR FROM ANY OTHER JURISDICTION WHERE TO DO SO WOULD VIOLATE THE LAWS OF SUCH JURISDICTION

ADNOC International Enters into Investment Agreement with Covestro and Announces Voluntary Public Takeover Offer

• ADNOC International signs an Investment Agreement with Covestro marking a strategic milestone in ADNOC’s chemicals growth strategy
• Cash consideration of €62 per share offered to shareholders, corresponding to an enterprise value of €14.7 billion
• Offer represents an attractive premium of c. 54% to the unaffected share price of Covestro
• ADNOC International to subscribe to a 10% non-preemptive capital increase in the amount of €1.17 billion in Covestro at closing of the transaction
• Covestro welcomes and supports the Takeover Offer

Abu Dhabi, UAE | Leverkusen, Germany – October 1, 2024: ADNOC International Limited and other companies of ADNOC Group, including its wholly owned indirect subsidiary ADNOC International Germany Holding AG (the “Bidder”; the Bidder together with ADNOC International Limited “ADNOC International”), today entered into an investment agreement (the “Investment Agreement”) with Covestro AG (“Covestro” or the “Company”) and published its decision to launch a voluntary public takeover offer to all shareholders of Covestro for the acquisition of all outstanding shares of Covestro (the “Takeover Offer”). The Bidder will offer Covestro shareholders cash consideration of €62 per share (the “Offer Price”), which represents a premium of c. 54% to the unaffected closing share price of Covestro on June 19, 2023, the day prior to first market rumors regarding a potential transaction.

Strategic milestone in ADNOC’s chemicals growth strategy

The transaction is a key pillar of ADNOC International’s growth strategy to become a top 5 global chemicals player. Covestro will become the foundational platform for ADNOC International’s performance materials and specialty chemicals business.

His Excellency Dr. Sultan Ahmed Al Jaber, ADNOC Managing Director and Group CEO, said: “As a global leader and industrial pioneer in chemicals, Covestro brings unmatched expertise in high-tech specialty chemicals and materials, using advanced technologies including AI. This strategic partnership is a natural fit and aligns seamlessly with ADNOC’s ongoing smart growth and future proofing strategy and our vision to become a top 5 global chemicals company. It represents a pivotal step for both organizations and embodies our disciplined approach to investing in strategic assets that drive long-term value and unlock new growth opportunities, while reinforcing our commitment to diversifying ADNOC’s portfolio. Our aligned strategies uniquely position us to meet the growing global demand for energy and chemical products, while accelerating the transition to a circular economy.”

Board of Management and Supervisory Board of Covestro welcome and support transaction

ADNOC International will be a reliable long-term and trusted partner to Covestro, supporting the Company during the ongoing evolution of the global chemicals sector, while delivering its strategy. The Board of Management and the Supervisory Board of Covestro welcome and support the Takeover Offer. Subject to their review of the Offer Document in relation to the Takeover Offer (the “Offer Document”), the Board of Management and Supervisory Board of Covestro will recommend that Covestro shareholders accept the Takeover Offer.

Markus Steilemann, Chief Executive Officer of Covestro, said: “We are convinced that the agreement reached today with ADNOC International is in the best interest of Covestro, our employees, our shareholders, and all other stakeholders. With ADNOC International's support, we will have an even stronger foundation for sustainable growth in highly attractive sectors and can make an even greater contribution to the green transformation. We regard ADNOC International as a financially strong and long-term oriented partner with whom we will further drive our successful “Sustainable Future” strategy in all market conditions. Our complementary growth strategies, shared commitment to advanced technologies, innovation and sustainability are key cornerstones of our partnership.”

Comprehensive agreement as foundation for a successful long-term partnership

The underlying objective of the transaction is to solidify Covestro’s position as one of the world’s leading manufacturers of high-quality polymer materials – in both segments, “Performance Materials” as well as in “Solutions & Specialties”. As part of the Investment Agreement, ADNOC International has committed to fully support Covestro in executing its “Sustainable Future” strategy and further strategic development. ADNOC International has also undertaken to provide additional funding to Covestro by subscribing to a non-preemptive capital increase in Covestro from authorized capital with exclusion of subscription rights of 10% of Covestro’s current share capital at the Offer Price at closing of the transaction, which will provide Covestro with additional funds in the amount of €1.17 billion.

ADNOC International has the utmost trust and confidence in the ability of Covestro’s management team and has asked the team to continue leading the Company after completion of the transaction. ADNOC International fully shares the view of the Covestro management team that the passion and expertise of Covestro’s workforce is pivotal to the Company’s success and views the transaction as an opportunity to foster the further development of Covestro. ADNOC International fully supports and respects the commitments made to Covestro’s employees and has undertaken to uphold existing works council, collective bargaining, and similar agreements.

Key transaction details

The Takeover Offer will be subject to a minimum acceptance threshold of 50% plus one share of the Company’s issued share capital (Grundkapital), absence of certain material adverse changes, and certain further customary conditions, including merger control, foreign investment control, and EU Foreign Subsidies Regulation clearances, which will be set forth in the Offer Document.

ADNOC International will finance the Takeover Offer with available cash. In the Investment Agreement, the Bidder has undertaken to not enter into a domination and/or profit and loss transfer agreement (Beherrschungs- und/ oder Gewinnabführungsvertrag) during the term of the Investment Agreement, which expires on December 31, 2028, and to include a corresponding undertaking to all shareholders in the Offer Document. The Board of Management has agreed to support, subject to its fiduciary duties, a delisting of Covestro and/or a squeeze-out if ADNOC International intends to execute either. Covestro has further undertaken to not propose a dividend until the consummation of the transaction.

Next steps

The Takeover Offer will be made pursuant to the terms and conditions set out in the Offer Document, which will be submitted to the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – “BaFin”) for approval in due course. After approval of the Offer Document by BaFin, the Offer Document and other information pertaining to the Takeover Offer will be published in accordance with the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz) at www.covestro-offer.com and the acceptance period will start.

Advisors

Morgan Stanley is acting as exclusive financial advisor and Freshfields Bruckhaus Deringer is acting as legal advisor to the acquiror on this transaction.

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About ADNOC International

ADNOC International holds assets and investments across sectors spanning energy, chemicals, and low-carbon solutions globally.

Contact

Oliver Thompson
Vice President, Financial Communications
media@adnoc.ae

Important notice

This announcement is neither an offer to purchase nor a solicitation of an offer to sell shares in Covestro AG (the “Covestro Shares”). The final terms of the Takeover Offer as well as other provisions relating to the Takeover Offer will be communicated in the Offer Document after the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) has permitted the publication of the Offer Document. The Bidder reserves the right to deviate from the key items presented here in the final terms and conditions of the Takeover Offer to the extent legally permissible. Investors and holders of Covestro Shares are strongly advised to read the Offer Document and all other documents relating to the Takeover Offer as soon as they have been made public, as they will contain important information. The Offer Document for the Takeover Offer (in German and a non-binding English translation) with the detailed terms and conditions and other information on the Takeover Offer will be published after approval by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) amongst other information on the internet at www.covestro-offer.com.

The Takeover Offer will be implemented exclusively on the basis of the applicable provisions of German law, in particular the German Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz - WpÜG), and certain securities law provisions of the United States of America. The Takeover Offer will not be conducted in accordance with the legal requirements of jurisdictions other than the Federal Republic of Germany or the United States of America (as applicable). Accordingly, no notices, filings, approvals, or authorizations for the Takeover Offer have been filed, caused to be filed or granted outside the Federal Republic of Germany or the United States of America (as applicable). Investors and holders of Covestro Shares cannot rely on being protected by the investor protection laws of any jurisdiction other than the Federal Republic of Germany or the United States of America (as applicable). This announcement may not be released or otherwise distributed in whole or in part, in any jurisdiction in which the Takeover Offer would be prohibited by applicable law.

The Bidder reserves the right, to the extent permitted by law, to directly or indirectly acquire additional Covestro Shares outside the Takeover Offer on or off the stock exchange, provided that such acquisitions or arrangements to acquire share are not made in the United States of America and will comply with the applicable German statutory provisions. The Takeover Offer announced in this announcement will relate to shares in a German company admitted to trading on the Frankfurt Stock Exchange and will be subject to the disclosure requirements, rules, and practices applicable to companies listed in the Federal Republic of Germany, which differ from those of the United States of America and other jurisdictions in certain material respects.

Any contract entered into with the Bidder as a result of the acceptance of the planned Takeover Offer will be governed exclusively by and construed in accordance with the laws of the Federal Republic of Germany. It may be difficult for shareholders from the United States of America (or from elsewhere outside of Germany) to enforce certain rights and claims arising in connection with the Takeover Offer under United States of America federal securities laws (or other laws they are acquainted with) since the Bidder and the Company are located outside the United States of America (or the jurisdiction where the shareholder resides), and their respective officers and directors reside outside the United States of America (or the jurisdiction where the shareholder resides). It may not be possible to sue a non-United States of America company or its officers or directors in a non-United States of America court for violations of United States of America securities laws. It also may not be possible to compel a non-United States of America company or its subsidiaries to submit themselves to a United States of America court’s judgment.

To the extent that this document contains forward-looking statements, they are not statements of fact and are identified by the words “intend”, “will”, and similar expressions. These statements express the intentions, beliefs, or current expectations and assumptions of the Bidder and the persons acting jointly with it. Such forward-looking statements are based on current plans, estimates, and projections made by the Bidder and the persons acting jointly with it to the best of their knowledge, but are not guarantees of future accuracy (this applies in particular to circumstances beyond the control of the Bidder or the persons acting jointly with it). Forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and are usually beyond the Bidder’s control or the control of the persons acting jointly with it. It should be taken into account that actual results or consequences in the future may differ materially from those indicated or contained in the forward-looking statements. It cannot be ruled out that the Bidder and the persons acting jointly with it will change their intentions and estimates stated in documents or notifications or in the Offer Document yet to be published after publication of the documents, notifications, or the Offer Document.