Evonik set to reject BASF’s sweetened €11bn takeover bid
Speciality chemicals company may leave door open to future talks as larger rival seeks to create Germany-based industry champion
Chemicals company Evonik is planning to reject BASF’s improved €11bn takeover offer as too low, in the latest setback for efforts to create a Germany-based industry champion to take on Chinese, Middle Eastern and American rivals.
Evonik deems BASF’s sweetened bid from last week of €24 per share as undervaluing the speciality chemicals company and could make a statement to that effect in the coming days, according to people familiar with the matter.
But Essen-based Evonik could leave the door open for future discussions if BASF, the world’s biggest chemicals company by revenue, improves its offer further and provides more clarity on the strategic merits of a tie-up, some of the people said.
BASF chief executive Markus Kamieth last week promised to uphold Evonik’s existing job guarantees that extend to 2032 and argued that a combination would strengthen both companies amid rising competition from Asian and Middle Eastern players.
However, Kamieth cautioned his Ludwigshafen-based company would not pursue a merger “at any price”, without providing figures.
The latest bid of €24 was almost a 40 per cent premium to Evonik’s share price before news of potential takeover interest emerged in September. BASF’s original offer of €22.15 per share was rejected by Evonik that month.
Evonik currently prefers to pursue its standalone strategy that includes possible acquisitions as well as previously announced job cuts and plant closures to bolster the business, the people briefed on the situation said.
The company is among the bidders for US speciality chemicals peer Ashland, which is exploring a sale after facing activist investor pressure, the people added.
A deal was not without potential risk because of competition from other suitors as well as legacy litigation risks linked to asbestos claims, they said.
Any BASF takeover of Evonik hinges on the smaller company’s biggest shareholder, the RAG-Stiftung foundation, supporting a deal.
RAG’s board of trustees includes Hendrik Wüst, premier of North Rhine-Westphalia, who faces a state election in April, making any decision more political.
Shareholders, management and politicians would have to weigh the benefits of building a Germany-based champion with combined annual revenues of €74bn against the risks of a complex merger and potential cost cuts.
Evonik declined to comment. BASF and Ashland could not be immediately reached for comment.