ADNOC's Covestro takeover reshapes Germany's struggling chemical industry
Wage Deal Adds Pressure to Covestro Amid ADNOC Takeover
Just as ADNOC's squeeze-out of Covestro enters its final phase, the company faces a new cost challenge: Germany's IG BCE union and the BAVC employers' association have reached a collective bargaining agreement for the chemical industry. The wage increases come at a difficult time for a sector already under strain.
Two-Stage Pay Rise Starting in 2027
The new agreement provides for a 2.1% pay increase in 2027, followed by an additional 2.4% from January 2028. While this offers planning certainty, it also drives up labor costs. BASF CEO Markus Kamieth recently described the current environment as the "most difficult period in 25 years," citing high energy costs and global competitive pressure.
The Ifo Institute forecasts further production cuts and job losses in Germany's chemical sector for 2026. Dow has already announced plant closures in eastern Germany—a clear sign that the industry's structural challenges will not be resolved by wage deals alone.
ADNOC Expands Its Chemical Empire
Meanwhile, Covestro's future owner is pushing ahead with its global strategy. ADNOC and OMV today unveiled the leadership team for their joint venture, Borouge Group International (BGI), formed by the merger of Borealis, Borouge, and Nova Chemicals. Roger Kearns will take the helm as CEO, with Stefan Doboczky serving as Chief Commercial Officer. The combined entity is set to become the world's fourth-largest plastics producer, with Covestro operating as part of this new group.
The formal merger is scheduled for late March 2026, while ADNOC's squeeze-out offer for Covestro was submitted on March 20.
Share Price Hovers at Compensation Threshold
The takeover situation is clearly reflected in Covestro's stock price, which stands at €59.54—just above the fixed cash compensation of €59.46 per share. Operational industry news now has little impact on valuation, as the market focuses almost entirely on this floor price. With a 2026 P/E ratio of 98.3, the current valuation is driven overwhelmingly by the takeover terms rather than fundamental earnings.
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