Germany has formally approved the acquisition of Covestro by an investment arm linked to Adnoc, marking a pivotal moment for both the UAE energy giant and Europe’s chemicals sector.
The green light from the German Ministry of Economy follows the European Commission’s earlier approval, removing the final major regulatory hurdle to a deal that has been intensely scrutinised for months.
The approval grants Adnoc’s investment vehicle, XRG, permission to take control of one of Germany’s most prominent chemical producers. Covestro, formerly the plastics division of Bayer before its 2015 spin-off, has grown into a global supplier of high-performance polymers. Its materials are essential in products ranging from rigid foams used in refrigerators and freezers to flexible foams found in mattresses, automotive seating, and a broad spectrum of consumer and industrial applications.
The company employs about 17,500 people worldwide, including roughly 7,000 across its German sites, making it a significant player in the national industrial landscape.
The deal arrives at a time when Germany’s manufacturing base — long a pillar of its economic strength — is under substantial pressure. Rising energy costs, slowing industrial output, and restructuring across sectors have created an environment where foreign investment is increasingly viewed as a stabilising force. The Covestro acquisition reflects this broader context, offering an injection of capital at a moment when global competition and high production costs are weighing on Germany’s chemical industry.
Covestro’s leadership welcomed the approval, describing the takeover as an opportunity to reinforce innovation and competitiveness. CEO Markus Steilemann said the company was “starting a new and important chapter,” predicting that a partnership with XRG would accelerate digital transformation, expand circular-economy initiatives, and strengthen Covestro’s leadership in advanced materials. In his view, the backing of a long-term global investor provides both strategic continuity and the financial firepower needed to navigate an increasingly complex market.
XRG Director Rainer Zille echoed that optimism, stating that Adnoc aims to position itself among the top three global investors in the chemical industry. The acquisition aligns with Adnoc’s broader strategy to diversify revenue streams, expand internationally, and build a robust downstream portfolio that complements its energy operations. The company has spent the past several years pursuing strategic investments and partnerships designed to propel its transformation into a global industrial and energy powerhouse.
The road to approval was not smooth. The European Commission opened an investigation in July under the Foreign Subsidies Regulation (FSR), expressing preliminary concerns that the UAE may have provided Adnoc with foreign subsidies — such as an unlimited guarantee and a committed capital injection — that could distort competition within the EU market. Regulators questioned whether such support enabled Adnoc to offer terms that an unsubsidised investor could not match.
Adnoc pushed back firmly. A spokesperson said the company “contests the preliminary findings” and emphasised its long record of value creation, insisting the transaction would “add great value for all stakeholders and stimulate European industry.” With both Brussels and Berlin now satisfied that conditions for the takeover have been met, Adnoc has prevailed.
For Germany, the approval signals openness to targeted foreign investment despite geopolitical and regulatory scrutiny. For Adnoc, it marks a major strategic victory — one that could reshape the competitive dynamics of the global chemicals sector.
