RAG Stiftung, the majority owner of German chemical maker Evonik Industries AG (EVK), said it’s getting “lots of calls” from Mittelstand enterprises, or smaller manufacturers in the country, that are seeking a buyer.
“We were surprised at how many Mittelstand companies contact us” as possible acquisition targets, Chief Executive Officer Werner Mueller said. “Typical cases are successful companies that are world leaders in their certain little segment” and that generate about 120 million euros ($163 million) in annual sales.
The foundation was established in 2007 to fund the closing of the country’s deep-shaft coal mines. It’s seeking to diversify assets and will successively reduce its stake in Evonik, Mueller said today at a press conference. The foundation, which bought a minority holding in generic drugmaker Zellbios in April, is also interested in purchasing majority stakes and may announce a deal this year, the CEO said.
Germany’s Mittelstand companies, numbering about 3 million businesses and usually family owned, account for about half of the country’s gross domestic product. The enterprises have been seeking alternatives to pay for growth since the global recession hurt access to finance.
RAG-Stiftung took a step today toward scaling back its ownership of Evonik by issuing a convertible bond equivalent to 3 percent of the chemical maker’s capital. The foundation will look at companies in the automation technology and water industries, and everything that is “as far away from chemicals as possible,” Mueller said at the press briefing in Essen, where the foundation and Evonik are both based.
Evonik is 68 percent-owned by RAG-Stiftung and 18 percent by CVC Capital Partners after they sold a 14 percent stake in the chemical producer to investors in a private sale process and then listed the stock on Germany’s Xetra exchange in April 2013. RAG’s goal is to reduce its stake to 25 percent, while CVC will exit completely.
The foundation raised 600 million euros with the debt issue, Chief Financial Officer Helmut Linssen said. The securities, which mature at the end of 2018, carry a 0 percent coupon and can be exchanged for Evonik stock when the shares rise 37.5 percent, Linssen said.
CVC raised 350 million euros selling bonds exchangeable for Evonik stock in November. The three-year securities carry a coupon of 2 percent and can be handed over for Evonik stock when the shares rise to 35.44 euros, about 30 percent more than the price at the time.
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