Heavy! Oil giant ADNOC offers to acquire Covestro!

Abu Dhabi National Oil Company (ADNOC) has made a preliminary bid for German chemicals producer Covestro AG, according to people familiar with the matter.

The state-backed energy company has made initial contacts with Covestro officials in Le Kusen to express its interest in a deal. Covestro shares have risen about 7 percent this year, giving them a market capitalization of 7.5 billion euros ($8.2 billion).

Relevant sources said that the relevant negotiations are still at an early stage, and it is not yet certain whether ADNOC will decide to proceed with the acquisition. Representatives for ADNOC declined to comment on the acquisition, while a Covestro spokesman was not immediately available for comment.

ADNOC, which supplies nearly all of OPEC member United Arab Emirates’ oil, plans to invest $150 billion to expand its gas, chemicals and clean energy businesses globally. It is part of a push by Persian Gulf oil producers to diversify oil sales to capture markets in countries phasing out transport fuels such as gasoline and diesel.

Last year, ADNOC bought a stake worth around 3.9 billion euros in Austria’s Austrian Oil & Gas AG (OMV AG) to increase its exposure to chemicals production. It also holds a 25% stake in Austrian chemicals and plastics maker Borealis AG, which is 75% owned by OMV. In May, ADNOC teamed up with Apollo Global Management to bid for a controlling stake in Brazilian petrochemical producer Braskem SA.