- Intention to float in Sept. with first trading day in Oct.
- IPO preferred, company not too concerned about exact proceeds
Bayer AG still plans to list its Covestro plastics unit on the stock market this year, undeterred by volatility that sent indexes in Europe down the most since 2008, according to people familiar with the matter.
The German drugmaker probably will announce its intention to float in September -- even as early as next week -- and the first trading day could be in October, said the people, who asked not to be identified as the matter is private.
The Leverkusen-based company favors an initial public offering over a spinoff, and may be willing to accept a discounted price amid the current market volatility to move ahead soon, one of the people said. Still, Bayer is also reserving the right to push the IPO back until early next year, the people said.
Shares worldwide succumbed on Monday to a selloff that’s wiped more than $5 trillion off the value of equities around the world since China’s shock currency devaluation on Aug. 11. A Bayer spokesman declined to comment on the specific timing of the IPO and reiterated that the listing is still scheduled to take place by mid-2016 at the latest.
“Given it’s a world-class asset with leading positions in its markets, I think they will manage it,” said Fabian Wenner, an analyst at Kepler Cheuvreux, who rates Bayer shares buy.
Other companies planning to sell shares on the stock market postponed those efforts in the wake of market turbulence. Medical technology firm Raindance Technologies Inc. said Monday it has withdrawn an IPO registration it filed in February, citing market conditions. A sustained slump in Chinese equities could halt plans by state-owned conglomerate Citic Ltd. to list some of its units, according to Chairman Chang Zhenming.
Covestro, which makes polycarbonates used in smartphones and automotive plastics, will be carved out as a separate legal entity on Sept. 1. The company is probably looking to offer 20 percent to 30 percent of its shares, which would make it one of the largest IPOs in Germany in recent years, one person said. While the pricing remains fluid, a share sale could value the company at about 11 billion euros, the person said.
With annual sales of 11.7 billion euros ($13.2 billion), Covestro would be a candidate to join Germany’s benchmark DAX index when enough shares are freely traded.