RAG Foundation’s Mueller Takes Step to Cutting Evonik Stake

RAG Foundation, the majority owner of German chemical maker Evonik Industries AG, is preparing to reduce its stake, according to the foundation’s head Werner Mueller.

Mueller presented his ideas for generating RAG earnings from alternative sources to Evonik to the foundation’s board of trustees at Christmas and is now starting to implement the strategy, he told reporters yesterday in Dusseldorf, Germany. RAG is in the process of buying stakes in small to medium-sized companies, known as the Mittelstand, Mueller said.

RAG Foundation, which owns 68 percent of Evonik, has pledged to reduce its stake to 25 percent and use the proceeds and dividend payments to fund the closing of Germany’s deep-shaft coal mines. A further sale of Evonik shares will happen “very slowly” at a later date and the body has secured a 2013 annual dividend from Evonik “at a sensible level,” he said.

“Mittelstand companies that are established on the world market” are interesting to RAG Foundation, Mueller said. The body will consider buying “half or a small majority” of individual companies, he said.

Evonik shares reversed declines in Frankfurt trading. The stock rose as much as 0.3 percent to 29.30 euros from a low of 29 euros earlier today. The Essen, Germany-based company has a market value of 13.6 billion euros.

The foundation isn’t interested in further investment in chemical companies and therefore won’t look at buying a stake in Lanxess AG, Mueller said. That doesn’t preclude Evonik from investing in Lanxess should it decide to do so, he said.

Wind Parks

The foundation has been approached about buying wind parks of the insolvent clean-power developer Prokon Regenerative Energien GmbH and the body could cooperate on the project with Steag GmbH, in which Evonik still holds a minority.

RAG Foundation plans to increase annual spending on education, science and culture to 14.5 million euros ($20 million) in 2018 from about 1.5 million euros now, Mueller said.

“As a start, the foundation has to have a concept to invest in the industrial economy so that we can generate at least similar returns from other areas,” Mueller said. “Evonik did very well in 2013 considering the environment.”

The RAG Foundation was established by the German government in 2007 to manage the development of chemical, energy and real-estate assets. the chemical activities were given the name of Evonik Industries. In 2008, it sold a 25.1 percent stake to CVC Capital Partners Ltd., which still holds 18 percent, according to data compiled by Bloomberg.