European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>ADNOC’s €62 per share bid for Covestro has 91.3% acceptance and antitrust clearance; the Foreign Subsidies Regulation review remains the gating item, with remedies on capital increase, guarantees, and IP.</li>
<li>At €58.74, Covestro trades 5.55% below €62, implying 24–30% annualized IRRs if FSR approval and closing arrive by year-end; a Q1’26 slip still screens ~18%; break downside approximates −22% today.</li>
<li>New buyers need a clean-up event: squeeze-out ≥95% or delisting/merger squeeze-out; DPLTA excluded until 2028. ADNOC needs ~6.7–7.0m shares to reach 95%, costing roughly €395–433m at €58.74–€62 post-approval and execution.</li>
</ul>


ADNOC’s €62 per share bid for Covestro has 91.3% acceptance and antitrust clearance; the Foreign Subsidies Regulation review remains the gating item, with remedies on capital increase, guarantees, and IP.
At €58.74, Covestro trades 5.55% below €62, implying 24–30% annualized IRRs if FSR approval and closing arrive by year-end; a Q1’26 slip still screens ~18%; break downside approximates −22% today.
New buyers need a clean-up event: squeeze-out ≥95% or delisting/merger squeeze-out; DPLTA excluded until 2028. ADNOC needs ~6.7–7.0m shares to reach 95%, costing roughly €395–433m at €58.74–€62 post-approval and execution.


Covestro / ADNOC: FSR Is the Hinge, Clean-Up the Catalyst

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>Covestro AG, a noted player in the polymers industry, recently disclosed its Q1 2025 financial results, indicating a period of stable sales but highlighted by several challenges impacting its performance.</li><li>The company achieved a revenue of EUR 3.5 billion, nearly unchanged from the previous year, while the EBITDA stood at EUR 137 million, which is notably in the upper range of their guidance.</li><li>However, this reflects a substantial 50% drop yearover-year due to significant costs associated with the company’s ongoing transformation initiatives.</li></ul>

Covestro AG, a noted player in the polymers industry, recently disclosed its Q1 2025 financial results, indicating a period of stable sales but highlighted by several challenges impacting its performance.The company achieved a revenue of EUR 3.5 billion, nearly unchanged from the previous year, while the EBITDA stood at EUR 137 million, which is notably in the upper range of their guidance.However, this reflects a substantial 50% drop yearover-year due to significant costs associated with the company’s ongoing transformation initiatives.

Covestro: Initiation of Coverage- A €400 Million STRONG Program Sets Stage for Profit-Driven Reinvention!

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Reportedly, Ito Junro's MBO for <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I (3382 JP)</a> includes a US assets IPO to help pay down MBO debt to Japanese banks.  Possible strategic mistake by Ito-san here.</li>
<li>Starwood/Warburg Pincus' firm Offer for <a href="https://www.smartkarma.com/entities/esr-group-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Group (1821 HK)</a> secures support from 30.79% of the register.</li>
<li>We may be wrong on <a href="https://www.smartkarma.com/entities/sanrio-co-ltd" target="_blank" data-smartkarma-citation="entities:16476:1" rel="noopener">Sanrio (8136 JP)</a> by a big factor but the multiple and the concentration risk of momentum factor means you are in an illiquid stock.</li>
</ul>


Reportedly, Ito Junro's MBO for Seven &amp; I (3382 JP) includes a US assets IPO to help pay down MBO debt to Japanese banks.  Possible strategic mistake by Ito-san here.
Starwood/Warburg Pincus' firm Offer for ESR Group (1821 HK) secures support from 30.79% of the register.
We may be wrong on Sanrio (8136 JP) by a big factor but the multiple and the concentration risk of momentum factor means you are in an illiquid stock.


Last Week in Event SPACE: Seven & I Holdings, ESR Group, Sanrio, HKBN

<ul>
<li>ADNOC International (XRG) secured a controlling 69.94% stake in Covestro after the initial acceptance period, surpassing the 50% plus one share threshold.</li>
<li>Regulatory Approvals Pending: The transaction awaits merger control, foreign investment, and EU Foreign Subsidies Regulation clearances, with finalization expected in H2 2025 (usual timeline for deal in the chemical industry).</li>
<li>Remaining shareholders can tender their shares during the additional acceptance period; squeeze-out is likely. Recommendation is tender.</li>
</ul>


ADNOC International (XRG) secured a controlling 69.94% stake in Covestro after the initial acceptance period, surpassing the 50% plus one share threshold.
Regulatory Approvals Pending: The transaction awaits merger control, foreign investment, and EU Foreign Subsidies Regulation clearances, with finalization expected in H2 2025 (usual timeline for deal in the chemical industry).
Remaining shareholders can tender their shares during the additional acceptance period; squeeze-out is likely. Recommendation is tender.


Keisei Electric Railway Co / Event-Driven

<ul>
<li>Remain BULLISH <a href="https://www.smartkarma.com/entities/keisei-electric-railway-co" target="_blank" data-smartkarma-citation="entities:10876:1" rel="noopener">Keisei Electric Railway Co (9009 JP) </a> with low conviction. This is buying on narrative rather than fundamentals but there is no need to not get involved.</li>
<li>
<a href="https://www.smartkarma.com/entities/vitasoy-intl-holdings-ltd" target="_blank" data-smartkarma-citation="entities:2807:1" rel="noopener">Vitasoy Intl Holdings (345 HK)</a>'s share price run up is excessive as Philip Ng and<a href="https://www.smartkarma.com/entities/yeo-hiap-seng-ltd" target="_blank" data-smartkarma-citation="entities:9051:1" rel="noopener">Yeo Hiap Seng (YHS SP)</a> over-extend their hand.</li>
<li>
<a href="https://www.smartkarma.com/entities/nec-networks-system-integr" target="_blank" data-smartkarma-citation="entities:16396:1" rel="noopener">Nec Networks (1973 JP)</a> has yet to trade below terms. The premium is small, perhaps reflecting the risk NEC will lower the minimum threshold. But there is still a fight here.</li>
</ul>


Remain BULLISH Keisei Electric Railway Co (9009 JP)  with low conviction. This is buying on narrative rather than fundamentals but there is no need to not get involved.

Vitasoy Intl Holdings (345 HK)'s share price run up is excessive as Philip Ng andYeo Hiap Seng (YHS SP) over-extend their hand.

Nec Networks (1973 JP) has yet to trade below terms. The premium is small, perhaps reflecting the risk NEC will lower the minimum threshold. But there is still a fight here.


Last Week in Event SPACE: Keisei Electric Railway, Vitasoy, NEC Network, ESR Group

Germany

Covestro AG manufactures polymers and high performance plastics.  The Company  manufactures, markets, and distributes coatings, adhesives, insulating materials, sealants,  polycarbonates, and polyurethanes. Covestro markets its products to industries including  automotive, construction, health, electronics, and medical engineering.

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Covestro AG (1COV GR)

Covestro / ADNOC: FSR Is the Hinge, Clean-Up the Catalyst

Covestro’s deal is past antitrust; next comes the EU FSR ruling, with ADNOC preparing remedies. With ~91% control, ADNOC has clean-up options...

Jesus Rodriguez Aguilar

Covestro: Initiation of Coverage- A €400 Million STRONG Program Sets Stage for Profit-Driven Reinvention!

Covestro AG, a noted player in the polymers industry, recently disclosed its Q1 2025 financial results, indicating a period of stable sales but...

Baptista Research

Last Week in Event SPACE: Seven & I Holdings, ESR Group, Sanrio, HKBN

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

ADNOC/Covestro: Offer Results Update

ADNOC International (XRG) secured a controlling 69.94% stake in Covestro after the initial acceptance period, surpassing the 50% plus one share...

Jesus Rodriguez Aguilar

Last Week in Event SPACE: Keisei Electric Railway, Vitasoy, NEC Network, ESR Group

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

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