Germany's Covestro rejects takeover proposal from ADNOC

FRANKFURT, June 22 (Reuters) - German plastics and chemicals maker Covestro AG (1COV.DE) has rejected an initial takeover proposal from Abu Dhabi National Oil Co (ADNOC), saying the offer was too low, two sources familiar with the matter said.

The stock jumped as much as 3.7% after Bloomberg first reported the news on Thursday, having traded down earlier in the day. It was up 2.4% at 1530 GMT.

Reuters reported on Tuesday that ADNOC had approached Covestro with a takeover proposal worth more than 10 billion euros ($11 billion). Covestro and ADNOC declined to comment on Thursday's report.

"Covestro is a very well positioned, cyclical company that is currently cheaply valued. It would probably only be a matter of price whether the existing shareholders would accept such a takeover offer," Union Investment fund manager Arne Rautenberg said.

Covestro, a maker of transparent polycarbonate plastics as well as chemicals for insulation and upholstery foams, in April issued earnings guidance that reassured markets about its growth prospects. It also resumed a share buyback programme.

However, supply and demand for polyurethanes is deteriorating, an industry investor said, adding that Covestro could well accept a higher offer between 60-65 euros per share.

($1 = 0.9088 euros)

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Emma-Victoria reports on mergers and acquisitions across Europe, with previous experience at Mergermarket, Bloomberg, The Daily Telegraph and Deutsche Presse Agentur.