(Bloomberg) -- Abu Dhabi National Oil Co., the energy giant seeking to expand its chemical operations through a series of ambitious deals, has boosted its takeover offer for Covestro AG to about €11 billion ($12.4 billion), people familiar with the matter said. 

Adnoc increased its proposal to about €57 per share in the hopes of convincing the German company to enter talks, the people said. That’s up from its first informal bid of around €55. 

The state-backed firm voiced confidence in Covestro’s strategy and management, according to the people, who asked not to be identified because the information is private. 

Covestro shares fell 2.9% in Frankfurt trading Wednesday, giving the company a market value of €9.4 billion. The stock had jumped in late trading on Tuesday, following the Bloomberg News report on Adnoc increasing its offer, to close at its highest level since February 2022. 

Last month, Leverkusen-based Covestro rejected Adnoc’s earlier proposal as too low, people familiar with the matter said at the time. Covestro also raised questions around Adnoc’s plans for its specialties operations.

Adnoc Chief Executive Officer Sultan Al Jaber has been busy hunting for deals to better compete with Saudi Aramco and its Sabic chemical unit. The Abu Dhabi firm is in separate talks with Austria’s OMV AG about a potential merger of two companies they back, Borouge Plc and Borealis AG, to form a chemicals and plastics giant worth more than $30 billion. 

The mooted transactions dovetail with a wider plan by the United Arab Emirates to attract investment and technology as well as build new industries and manufacturing capabilities. Adnoc has been expanding a refining and chemicals hub in Abu Dhabi to find additional outlets for its oil and natural gas production and make the plastics that go into consumer goods.

Adnoc has tried to address Covestro’s concerns about its offer, including over how it would help the German company’s management develop the specialty chemical operations, according the people. If negotiations are entered, there could be scope for further increases in Adnoc’s bid. 

Ben Kelly, an analyst at Louis Capital Markets, said Adnoc may need to go higher still to win over Covestro.

“Covestro knows Adnoc can afford to pay up so I think they’ll be patient,” Kelly said. “An improved offer of €61.5 would equate to 8x EV/Ebitda and in our opinion would be more likely to be accepted by the Covestro board.”

Deliberations are ongoing, and it’s unclear how Covestro will respond to the latest proposal. Representatives for Adnoc and Covestro declined to comment. 

Adnoc, which produces almost all the oil in the United Arab Emirates, plans to invest $150 billion to expand production capacity for crude, natural gas and chemicals. It’s also investing in low-carbon energy.

Read More: Private Equity Titans Tap Sovereign Wealth to Get Deals Done

--With assistance from Alexandra Muller.

(Updates with closing share price in fourth paragraph.)

©2023 Bloomberg L.P.