© Reuters. FILE PHOTO: The logo of German chemicals maker Covestro is pictured outside its headquarters in Leverkusen, Germany, July 26, 2019. REUTERS/Wolfgang Rattay/File Photo
By Emma-Victoria Farr and Maha El Dahan
(Reuters) -Covestro on Friday has entered into open-ended discussions with suitor Abu Dhabi National Oil Company (ADNOC) over a takeover approach, the German company said in a statement.
Covestro’s change in stance comes after two top-15 investors told Reuters last month that the plastics and chemicals maker should engage in formal takeover talks in the interest of its shareholders.
Earlier on Friday, Reuters reported citing a source that Covestro’s board would meet to discuss formal negotiations with ADNOC.
The company’s shares closed up 7.8% at 51.5 euros having hit their highest levels in about 18 months.
The CEO of larger rival BASF has described the reported approach as a sign that the European chemical industry, due to cost inflation and a weak economy, needs support from lawmakers to become more competitive.
ADNOC, which is trying to diversify and develop its downstream and renewable energy operations, made a non-binding offer for Covestro of 55 euros per share in June, which was rejected, according to media reports.
In August, ADNOC indicated to Covestro, which has not commented on the takeover approach, that it could raise its informal offer to 60 euros conditional on the German company entering formal talks, Reuters reported at the time.
That non-binding offer would value Covestro, a maker of chemicals used in insulation, upholstery foams, coatings and transparent engineering plastics, at about 11.6 billion euros ($12.4 billion).
In August Covestro warned demand was not improving this year as customers continue to draw down existing inventory rather than order new chemicals.
($1 = 0.9329 euro)
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