EU regulators are preparing to dig deeper into Abu Dhabi National Oil Co.'s $13.7 billion takeover of Covestro, citing potential market distortion from state backing. According to people close to the matter, Brussels may launch a formal probe under its Foreign Subsidies Regulation before the July 28 deadline. The concern? That Adnoc's deep-pocketed government ties could tilt the playing field in Europe's chemicals sector—where Covestro plays a critical role supplying materials to top car and phone makers.
This wouldn't be the first time a Gulf-backed deal hits EU friction. Last year, Emirates Telecommunications had to remove a blanket state guarantee to get its €2.2 billion telecoms acquisition over the line. The Covestro deal is shaping up as a new test case—possibly signaling a broader shift in how the EU treats state-funded acquirers outside China. While the foreign subsidies tool has mostly targeted Chinese companies in rail and renewables so far, Adnoc's bid shows Brussels isn't limiting its scrutiny to Beijing anymore.
If the Commission pushes ahead, the consequences could be real: fines, blocked tenders, even forced deal unwinds. For now, both Covestro and Adnoc have declined to comment. But the message from regulators is getting harder to ignore—if you're bringing deep state funding into Europe, be prepared for the red tape.
