July 31, 2025 -
EU Launches In-Depth Probe Into Adnoc’s Covestro Takeover Over Subsidy Concerns
The European Commission has initiated a formal investigation into Abu Dhabi National Oil Company (Adnoc)’s proposed acquisition of German chemical giant Covestro, citing concerns over potential market distortions from foreign subsidies.
In a statement released today, the Commission expressed “serious doubts” about whether financial support from the UAE—including unlimited state guarantees and Adnoc’s pledged capital injections—could allow the Emirati firm to outbid competitors with non-market terms. The regulator also warned that the deal, valued at €12 billion ($14.1 billion), might harm competition in the EU’s chemical sector post-acquisition.
While the Commission had previously cleared the transaction on antitrust grounds in May, it has now escalated scrutiny under the Foreign Subsidies Regulation (FSR). A final decision is expected by December 2, 2025, with possible outcomes ranging from unconditional approval to remedies or even a veto.
Covestro confirmed in a statement that Adnoc’s subsidiary, XRG, remains in “constructive discussions” with EU officials to address regulatory concerns. The probe introduces fresh uncertainty into one of the chemical industry’s most closely watched deals, with implications for future cross-border M&A in the sector.