ADNOC's Covestro buy may be boosted by foreign subsidies, EU warns
ADNOC struck the deal to buy Covestro last October, marking its biggest ever acquisition and one of the largest foreign takeovers of an EU company by a Gulf state.
The European Commission, which has been reviewing the deal under its foreign subsidies rules since May, opened an in-depth investigation on Monday, warning that subsidies granted by the United Arab Emirates could distort the EU internal market.
The Commission, which acts as the EU competition enforcer, said the possible foreign subsidies include an unlimited guarantee from the UAE, as well as a committed capital increase by ADNOC into Covestro.
"ADNOC may have offered an unusually high price and other favourable conditions, which may have deterred other investors from making an offer," it said in a statement.
The EU investigation will also look into possible negative effects in the internal market resulting from the merged company's activities once the deal is concluded.
"XRG and Covestro remain in constructive discussions with the European Commission and are cooperating to conclude the FSR review," the German company said in a statement. XRG is the international investment arm of ADNOC.
The Commission set a December 2 deadline for its decision on the deal.
The EU's Foreign Subsidies Regulation (FSR) focuses on unfair foreign aid for companies in a bid to rein in unfair competition from non-EU companies subsidised by their governments.
UAE telecoms group e& secured EU approval to buy parts of Czech telecoms company PPF last year after agreeing to scrap an unlimited state guarantee and not to channel foreign subsidies to the activities of the merged company in the EU.
($1 = 0.8569 euros)
(Reporting by Bart Meijer. Additional reporting by Patricia Weiss in Frankfurt and Bartosz Dabrowski in Gdansk. Writing by Foo Yun Chee. Editing by Louise Heavens and Mark Potter)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Zawya
an hour ago
- Zawya
Shares mixed, euro dips as tariff costs counted
LONDON - Wall Street futures pointed to a buoyant open on Tuesday ahead of earnings reports from a number of companies and the Federal Reserve's policy meeting that starts later in the day. S&P 500 futures ticked up 0.3%, while Nasdaq futures added 0.5%, riding on hopes for upbeat results from mega caps this week that include Apple, Meta Platforms , Microsoft and Amazon. The dollar index climbed 0.4% to 98.951 after the rush out of short dollar positions lifted it 1% overnight, while it eased a one-week high on the yen to stand at 148.69 . Yields on 10-year Treasuries inched up 3 basis points to 4.392%, having crept higher on Monday as markets braced for another steady decision on interest rates from the Federal Reserve. Futures imply a 97% chance the Fed would keep rates at 4.25%-4.5% at its meeting on Wednesday and reiterate concerns that tariffs will push inflation higher in the short term. Analysts also assume one, or maybe two, Fed officials will dissent in favour of a cut and supporting wagers for a move in September. The odds could change depending on a slew of U.S. data this week including gross domestic product for the second quarter, where growth is expected to rebound to an annualised 2.4%, after a 0.5% contraction in the first quarter. Figures on job openings are due later on Tuesday that will help refine forecasts for the crucial payrolls report on Friday. "The equity rally has narrowed, valuations are stretched and market internals are flashing caution, and consumer data -particularly around housing and retail - show signs of fatigue," said Bruno Schneller, managing director at Erlen Capital Management, Zurich. "This is the start of a 'show-me' phase - for both policymakers and corporates. Markets will demand confirmation: from earnings, from macro, and from the Fed," Erlen added. Canada's central bank also convenes on Wednesday and again is widely expected to hold rates at 2.75%. TARIFF ECHOES U.S. equity moves follow record closing highs for the S&P and the Nasdaq on Monday in volatile trading after the U.S. struck a trade agreement with the European Union, while the Dow remained just about 200 points short of an all-time high. The U.S.-EU trade deal, announced on Sunday, halved threatened 30% U.S. tariffs on EU imports to 15% and bolstered expectations that more such agreements will follow ahead of President Donald Trump's looming August 1 deadline. Trump also flagged a "world tariff" rate of 15%-20% on all trading partners that were not negotiating a deal, among the highest rates since the Great Depression of the 1930s. "While the worst-case scenario was averted, the implied EU tariff increase from 1% in January is a significant tax increase on EU exports," wrote economists from JPMorgan in a note. "This is a very big shock that unwinds a century of U.S. leadership in global free trade," they said. "While we no longer see a U.S. recession as our baseline from this shock, the risk is still elevated at 40%." The euro fell 0.4% to $1.1543, after retreating 1.3% overnight in its largest drop since mid-May. European shares recovered after Monday's sell-off. Europe's broad STOXX 600 was up 0.6%, helped by some positive reactions to quarterly earnings. French and German stock indexes rose over 1%. Novo Nordisk, one of Europe's biggest companies by market cap, named Maziar Mike Doustdar as its new chief executive after the abrupt removal of its previous CEO in May. Shares in the company were down as much as 29.8% by 1149 GMT, wiping off over 80 billion euros in market cap at one point. An air of caution saw MSCI's broadest index of world shares tick down about 0.2% after China stocks ended higher on Tuesday as a new round of Sino-U.S. trade talks continued, while Japan's Nikkei lost 0.8%. A further risk to world growth came from a sudden spike in oil prices after Trump threatened a new deadline of 10 or 12 days for Russia to make progress toward ending the war in Ukraine or face tougher sanctions on oil exports. In commodity markets, prices for copper and iron ore were under pressure while gold was roughly flat at $3,316 an ounce . Brent was about 20 cents higher at $70.22 a barrel, while U.S. crude up 17 cents to $66.90. (Editing by Sam Holmes, Bernadette Baum and Mark Heinrich)
Zawya
an hour ago
- Zawya
Italy to tell EU terms for UniCredit's BPM bid remain despite deal collapse
ROME - Italy will tell the European Union the terms it imposed on UniCredit's bid for Banco BPM remain in place even after the collapse of the deal, sources said, responding to criticism from Brussels that could ultimately lead to disciplinary steps. UniCredit withdrew its offer for BPM on July 22, blaming government intervention for scuppering the 15 billion-euro ($17.3 billion) transaction. Days earlier, the European Commission warned Italy that it could have breached EU rules by using its so-called golden powers aimed at shielding key assets to rein in UniCredit's takeover plans, giving Rome 20 working days to reply to its objections. Italy will send a letter of reply to Brussels as early as this week which will invoke national security considerations for the use of the golden powers, two sources familiar with the matter told Reuters. The European Commission was not immediately available for comment. In the letter Italy will also say it has no plans to withdraw the decree that set the conditions for the collapsed deal, arguing that their legitimacy was largely upheld by an Italian court ruling this month, the sources added. Among several conditions, Italy told UniCredit it had to halt activities in Russia, except for payments to Western companies, by early 2026, to prevent savings collected by Banco BPM from benefiting Moscow's economy as it continues its war against Ukraine. The court ruling due to be referenced in the letter to Brussels axed some of the terms imposed by the government, but upheld the Russia-related conditions. Italy also asked UniCredit to keep investments in Italian securities of BPM-owned fund manager Anima Holding, a provision that UniCredit said the court had made non-mandatory. While the EU said corporate mergers should be vetted at the EU level to prevent member states taking unjustified measures in their regard, Economy Minister Giancarlo Giorgetti argued national security was not for European institutions to judge. Should the government fail to persuade the European Commission that its use of the golden power rules was justified, Brussels could adopt a decision ordering it to revoke the conditions. Italy's use of its 'golden power' legislation is also under EU scrutiny in a separate process called EU Pilot. ($1 = 0.8672 euros)
Tahawul Tech
an hour ago
- Tahawul Tech
Space42, Microsoft, and Esri sign MoU to enhance mapping capabilities across Africa
Abu Dhabi — Space42, the UAE-based global AI-powered SpaceTech company, part of technology group G42, announced the signing of a Memorandum of Understanding (MoU) with Microsoft and Esri to deliver high-resolution, scalable base maps across all 54 African countries, serving over 1.4 billion people. Known as the 'Map Africa Initiative,' the project will create the most comprehensive base map of the continent to date, addressing challenges in infrastructure, investment, and institutional gaps. The updated mapping system will catalyze economic development through increased access to intelligent solutions that support governments, businesses, and communities. The five-year collaboration aims to strengthen geospatial capabilities across Africa and the UAE, and provide precise and accessible data to national and regional stakeholders. The MoU was signed at Esri's 2025 User Conference. Hasan Al Hosani, CEO of Smart Solutions at Space42, said, 'Partnership is core to the UAE's DNA, and is central to how Space42 operates. This collaboration with Microsoft and Esri is more than technical; it's strategic. It advances Space42's business priorities, strengthens our role as a trusted partner to governments, and delivers meaningful benefits to communities across Africa. Accurate, high-quality mapping and the intelligence solutions built on it are essential for growth, resilience, and inclusive innovation. With reliable data, communities and economies prosper.' Jack Dangermond, President of Esri said, 'We are proud to support the Map Africa Initiative in partnership with Space42. Transforming satellite imagery into detailed, accurate base maps at continental scale requires advanced geospatial technology and professional production workflows. These same capabilities have supported similar national and regional mapping efforts around the world. With Map Africa, we are helping to establish a foundational resource that will drive infrastructure planning, economic growth, and sustainable development across the continent.' A Transformative Investment in Africa's Digital Future Africa's maps are fragmented, outdated, or inaccessible, leaving governments and businesses to make major decisions with inaccurate and incomplete data. The Map Africa Initiative seeks to change that by producing continent-wide geospatial data that is accurate, timely, and locally managed. The process itself is collaborative from start to finish, bringing together the complementary strengths of each organisation. Space42 will lead fundraising efforts and project management, in addition to providing satellite data through sovereign capacities and commercial partners. It will process data using AI-powered Digital Twin models to produce dynamic, use-specific outputs and lead the Research & Development roadmap for new AI models and automation of map production workflows. Esri will orchestrate base map production workflows with its GeoAI and remote sensing capabilities, while also supporting regional hubs to train local teams and build long-term capacity. Microsoft will provide the secure cloud infrastructure and AI framework through Azure to support data processing, sharing, and integration at scale. Enabling Economic Opportunity, Resilience, and Innovation The initiative is expected to unlock long-term value across multiple industries: Ports and logistics: Detailed terrain and infrastructure mapping will improve route planning, reduce inefficiencies, and support Africa's emergence as a global logistics hub. Renewable energy: Site selection models will support optimal solar and wind deployment, improving efficiency and return on investment. Security and disaster response: Governments will be better equipped to monitor borders, track natural resources, and coordinate emergency responses. Smart cities and digital economies: Accurate maps are foundational to urban planning, public services, and technology deployment. The data will be licensed to national governments, enabling ownership and long-term updating by National Mapping Agencies. Over time, the initiative will also support a new commercial ecosystem of African startups. The data will eventually be housed in G42 and Microsoft-managed data centers across the continent. Strategic positioning for Space42 For Space42, the initiative represents more than a single project. It deepens long-standing partnerships with Microsoft and Esri, expands Space42's presence in Africa, and opens new commercial opportunities in analytics, licensing, and infrastructure support. The Map Africa Initiative is a testament to Space42's position as the global partner of choice for governments seeking geospatial data at scale, serving as both a strategic proof point and a commercial gateway to new markets. Peng Xiao, Group Chief Executive Officer at G42, said, 'We believe intelligence is the foundation for societal progress, yet it remains out of reach for millions across the Global South. This partnership is a decisive step toward closing that gap. Together with our partners, we will deliver AI-powered insights that enable African nations to plan smarter, build better, and grow more sustainably and responsibly. From agricultural optimization and natural resource management to strengthening public services infrastructure and economic empowerment, this partnership will help turn data into development, and intelligence into impact.' 'G42's partnership with Microsoft represents a shared commitment to harnessing AI as a global force for good. Together, we are building the infrastructure and applications that will extend the benefits of intelligence to communities across the world, transforming lives through technology that is trusted, responsible, and inclusive.' The initiative further pushes the limits of how technological innovation can advance communities and unlock economic opportunities. Aligning with the UAE's Global Investment and Innovation Agenda The UAE is Africa's largest foreign investor, with $44 billion in capital deployed in 2024 alone, nearly matching the combined investments of the UK and China. As the UAE's national space champion, Space42 advances this agenda by exporting AI and geospatial capabilities that enable data-driven development. By expanding the UAE's space ecosystem and fostering knowledge transfer across industries, Space42's geospatial mapping capabilities play a crucial role in building a future-ready, innovation-driven economy in both the UAE and Africa. For African countries, the mapping capabilities enable smarter land use, improved disaster response, modern infrastructure planning, and the foundations for smart cities and digital economies. For the UAE, this strategic engagement opens high-growth markets, deepens diplomatic and commercial ties, and consolidates its role as a global leader in AI-enabled space solutions.
