BASF and Evonik in Talks Over Possible Deal to Consolidate Chemical Industry
Potential Merger and Industry Impact
Background of the Negotiations
DUESSELDORF, Germany, Sept 25 (Reuters) - German chemical groups BASF and Evonik are in contact over a possible deal, a source familiar with the matter told Reuters on Friday, a move that could consolidate Europe's fragmented industry.
The Financial Times reported earlier that BASF had approached its rival and its biggest shareholder, the RAG Foundation, about a takeover that could create a German champion to compete with Chinese and American rivals.
Responses from Stakeholders
An Evonik spokesperson declined to comment on the FT report. BASF declined to comment. RAG Foundation was not immediately available for comment.
Market Reactions
Evonik shares continued a recent rally that, according to traders, was at least partly driven by takeover speculations. The stock was up 7% at 1220 GMT, while BASF shares fell 3%.
Industry Context
Germany's chemicals sector, a key driver of the country's industrial output, has faced rising energy costs and weaker demand. Industry association VCI said in September it expects production to fall 1.5% this year.
Company Financials
Essen-based Evonik has a market capitalisation of €8.4 billion and an enterprise value including net debt of about €12 billion, according to the FT.
The two companies had combined revenues of about €74 billion ($84 billion) last year.
Role of RAG Foundation
The position of RAG Foundation, which holds around 43% of Evonik, would be key to any deal.
Additional Information
($1 = 0.8767 euros)
(Reporting by Matthias Inverardi, writing by Ludwig Burger, editing by Kirsti Knolle and Thomas Seythal)