Bayer's Covestro to Raise About EU2.5 Billion in Share SaleBy
Initial public offering could be Germany's fifth-biggest
Subscription Sept. 21-Oct. 1 with first trading day Oct. 2
Bayer AG’s Covestro plastics unit plans to raise about 2.5 billion euros ($2.8 billion) in an initial public offering that could become Germany’s fifth-biggest.
Covestro plans to sell new shares for 26.50 euros to 35.50 euros apiece, the Leverkusen, Germany-based company said Friday in a statement. The number of shares sold will depend on the issue price and could range from 70.4 million to 94.3 million. Investors can subscribe to the stock from Sept. 21 to Oct. 1, and trading will start on the Frankfurt exchange on Oct. 2.
Covestro, which makes foam ingredients for mattresses as well as polycarbonates for car parts and medical devices, will use the cash to pay down debt to its parent company Bayer AG. The IPO will dilute Bayer’s stake, with the German drugmaker holding as little as 60 percent after the sale.
The IPO plan shows that Bayer and Covestro are undeterred by the current market volatility that sent indexes in Europe down the most since 2008. 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 Medical technology firm Raindance Technologies Inc. said in August it has withdrawn an IPO registration it filed in February, citing market conditions.
With the Covestro transaction under way, Bayer is reorganizing around its life sciences businesses, the company said in a separate statement Friday. Starting Jan. 1, Bayer will have three divisions: pharmaceuticals, run by Dieter Weinand; consumer health, led by Erica Mann; and crop sciences, headed by Liam Condon. Hartmut Klusik will also become labor director that day, replacing Michael Koenig, who didn’t want a contract extension, Bayer said.
Covestro is big enough to become a member of Germany’s benchmark DAX index when enough shares are freely traded. The company, also based in Leverkusen, had sales of 11.7 billion euros last year and is headed by Chief Executive Officer Patrick Thomas.
"After the IPO, we will be able to deploy our strengths more rapidly, effectively and flexibly and continue building on our competitive advantages," Thomas said in the statement.
(An earlier version of this story corrected the price range for the share sale and corrected the name spelling of the pharmaceutical division head.)
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