EU Commission's demands for Covestro deal are 'beyond reasonable or relevant', Adnoc's XRG says

Adnoc’s global energy investment arm, XRG, has hit back at the European Commission for its demands related to the Abu Dhabi company's €14.7 billion ($17 billion) acquisition of German chemicals firm Covestro.

The European Commission, which is reviewing the deal under its rules about foreign subsidies, said on Wednesday that it had temporarily halted its investigation to obtain additional information from Adnoc. It is expected to set a new deadline for its decision once it resumes the investigation.

XRG said it is “deeply disappointed” by the decision. “The Commission’s demands have strayed far beyond what is reasonable or relevant to this transaction, crossing into areas

that are both disproportionate and invasive,” a spokesperson said in a statement. “While we remain committed to pursuing a constructive path forward, the continuation of such an approach raises serious questions about the viability of this investment.”

The deal was announced in October 2024. In December, XRG said it would become the majority shareholder of Covestro, after the German chemicals company’s shareholders accepted a takeover offer.

The deal was expected to close in the second half of 2025 subject to regulatory approvals, XRG said in December. In July, the European Commission said it had opened an in-depth investigation to assess the deal over concerns that the companies could receive “foreign subsidies distorting the EU internal market”.

Covestro is one of the world’s largest manufacturers of high-quality polymer materials and their components.

XRG was launched last year as a global lower-carbon energy and chemicals investment company, with an enterprise value exceeding $80 billion. The company has been actively scaling up its operations globally and plans to double its asset value over the next decade, capitalising on energy transition, artificial intelligence advances and the rise of emerging economies.

XRG’s chemicals platform aims to become a top-five global player, producing and delivering chemical and speciality products to meet a projected 70 per cent increase in global demand by 2050, Adnoc said last year. It is investing in natural gas projects to meet growing demand for the fuel and its supercooled form, LNG.