Evonik rejects BASF takeover offer – offer considered too low

According to insiders, an almost 30 percent premium on the share price and a total valuation of 14 billion euros is not enough for the chemical company Evonik. And so the company rejects the first takeover offer from industry giant BASF. It's unclear whether he'll make improvements

According to insiders, the specialty chemicals group Evonik has rejected a takeover offer from its larger rival BASF. The offer was considered too low, two people familiar with the matter told the Reuters news agency. BASF offered around 22.15 euros per Evonik share. The offer corresponds to a premium of a good 28 percent on the Evonik share price before the first takeover speculation became known last week. The Essen-based company is valued at around 14 billion euros including debt. Evonik declined to comment.

BASF did not want to comment on the price mentioned. However, the group announced that a possible takeover would strengthen and complement its own core businesses. The company is pursuing a disciplined approach: "Our assessment is based on a synergy potential that can only be verified with the involvement of Evonik." Evonik shares rose by up to 2.5 percent to 19.85 euros.

Both companies confirmed exploratory talks at the end of last week. For BASF, a takeover of Evonik would be one of the largest acquisitions in the company's 160-year history. The Ludwigshafen-based company's largest acquisitions to date were the acquisition of Bayer's seed and herbicide businesses in 2018 for 7.6 billion euros and the purchase of the US catalyst manufacturer Engelhard in 2006 for 4.8 billion dollars.

The RAG Foundation, which holds 43 percent of Evonik, will play a key role in a possible merger. The state of North Rhine-Westphalia is represented on the foundation's board of trustees by Prime Minister Hendrik Wüst. The Düsseldorf Ministry of Economic Affairs is following the takeover interest very closely, explained Economics Minister Mona Neubaur. “Every solution must be measured by whether it would give a future to the investments at the locations in North Rhine-Westphalia and the people who work there,” she said. The foundation itself did not want to comment on the offer.

The chairman of the IG BCE trade union, Michael Vassiliadis, who sits on both the RAG Foundation's board of trustees and the BASF supervisory board, sees many open questions regarding a possible takeover. A purchase of a successful company by another will not become a story of the future for locations and employees simply because the new structure will become larger, he said on Monday. There must be future prospects and investment commitments for the employees of both companies.