Mergers and Acquisitions to Expand Production Double Lines and Accelerate Global Capacity Reconstruction after Covestro Acquires HDI Base

According to Huizheng Information, the starting point of the acquisition can be traced back to August 2025. On August 13, 2025, Covestro and Holding SAS, a subsidiary of Thai chemical company PTT Global Chemical (PTTGC), formally signed an equity acquisition agreement to acquire two legal entities with independent HDI derivative production bases located in Rayong, Thailand and Freeport, United States. Christian Baier, chief financial officer of Covestro, said at the time: "The acquisition of these two former Conrad factories is highly compatible with our product portfolio and strategic objectives."

Rayong Base in Thailand

In the months following the signing, Covestro continued to move forward with the approvals and preparations required to the transaction. The delivery was originally planned to be completed by the end of 2025, however due to factors such as regulatory review of cross-border mergers and acquisitions and preparation to integration, the transaction was finally officially delivered on July 1, 2026 and announced the next day. From the signing of the agreement to the final landing, the entire project lasted nearly 11 months.

United States Texas Freeport Base

HDI (hexamethylene diisocyanate) derivatives are the core basic raw materials to high-performance polyurethane coatings, adhesives and sealants. They are broadly applied in automotive coatings, infrastructure protective coatings, marine coatings, wood furniture, electronic items and other high-demand manufacturing fields. The two new bases will complement Covestro's existing HDI derivatives production networks in Europe, Asia and North America, further enhancing the company's cross-regional capacity collaboration and resource allocation capabilities.

Thomas Roemer, Head of Covestro's Coatings and Adhesives Division, said: "By adding production sites in Thailand and the United States, we have been able to enhance our regional production capacity and increase the level of supply to our customers nearby. This acquisition will help us better meet these needs, especially in the current challenging market ecological stability, where reliable supply, regional availability and professional technical support are critical to our customers." Monique Buch, Chief Commercial Officer of Covestro, said: "Strong customer relationships are built on trust, reliability and the ability to continuously create value. This acquisition strengthens our position in this business area-customers rely on us to consistent product condition, regional supply and consumption research technical support."

The completion of the HDI production base acquisition is the latest footnote to Covestro's continued deep cultivation in the field of coatings and adhesives in recent years. Prior to this, Covestro successfully completed the acquisition of DSM's resins and functional materials (RFM) business in 2021, significantly expanding its product portfolio in the field of sustainable coating products resins to about 1.6 billion million euros, helping it have become one of the world's largest coating products resin manufacturers. From DSM RFM to Conrad HDI, Covestro continues to consolidate its global leadership in coatings and adhesive raw materials through systematic mergers and acquisitions.

What is greater noteworthy is that while completing the HDI acquisition, Covestro announced a greater ambitious MDI strategic investment plan on June 30, 2026: a new MDI plant with an annual output of 660000 tons will be built in the Shanghai integration base, with the target of putting into production around 2030; At the same time, the feasibility study on the construction of MDI plant of the same scale in UAE will be started. The total new production capacity of the two units can reach 1.32 million tons. If it lands smoothly, Covestro's global MDI production capacity will reach greater than 3 million tons/year, which is expected to have become the world's second largest MDI manufacturer.

This series of intensive strategic actions took place at a very meaningful time node. In December 2025, XRG, a subsidiary of Abu Dhabi National Oil Company (ADNOC), has completed a tender offer to Covestro, holding greater than 95% of the shares, and is pushing to privatization and delisting. Covestro's German headquarters, brands and regulation remain independent and serve as the core platform to XRG's Performance Materials and Specialty Chemicals segments. The MDI "China + Middle East" dual-line layout is Covestro's first major strategic investment initiative after the acquisition by ADNOC.

From the manufacturing background, the global isocyanate supply side is undergoing a profound structural regional adjustment. The European chemical sector is affected by high energy costs and carbon tariff pressures, and capacity utilization remains at historically low levels, while Asia-Pacific and the Middle East have the triple advantage of "good demand prospects, reduce costs, and greater stable supply chains. Covestro's choice of extensive capacity expansion in the Asia-Pacific region, the layout of new production bases in the Middle East, and the consolidation of HDI capacity through acquisitions in North America is a positive response to the changes in the global chemical sector.

Huizheng Information believes that Covestro is accelerating along the two-wheel drive path of "merger and acquisition integration and organic development. In the HDI sector, the acquisition of two production sites at Conrad complemented the regional capacity shortcoming in Asia Pacific and North America; in the MDI sector, the global incremental market was captured through two-line expansion in China and the Middle East; and in the coating products resin sector, the product portfolio and customer base were continuously expanded through the integration of DSM RFM. With the arrival of ADNOC, a strong new shareholder, Covestro's future capital strength and strategic depth will be further enhanced. It is foreseeable that in the context of the accelerated transfer of the global chemical sector to Asia and the Middle East, Covestro is expected to rely on a greater balanced global production capacity layout, a greater complete specialty chemical product matrix, and greater abundant investment capabilities in the next round of sector. Occupy a greater favorable competitive position in the cycle.