Germany's largest chemical company, BASF, is exploring the possibility of acquiring its rival, specialty chemicals maker Evonik, whose market value exceeds 8 billion euros, through a voluntary public offer to buy out its shares, DPA reported, citing Evonik.
According to DPA, Evonik confirmed that BASF has approached the company with a preliminary offer. This offer includes a voluntary public offer to buy out all of the company's shares. Discussions are currently underway, but a final agreement on the deal has not yet been reached. According to Bloomberg, BASF has been working with consultants on the details of the potential deal for several months.
The world's largest chemical company expects the acquisition to expand its geographical presence and product line, including strengthening its competitive position with Chinese manufacturers, the publication notes. Given Evonik's market value, the scale of the deal could be huge. BASF declined to comment on the reports.
Chemical companies are currently facing a difficult situation due to sharply rising energy prices, a consequence of the conflict in the Middle East. However, some market segments are experiencing a short-term boom and rising selling prices due to product shortages. BASF has been cutting jobs for some time. At the end of July, the company announced that approximately 7,000 positions will be cut worldwide from January 2024 to the end of June 2026.
In addition to the staff cuts (mainly at the main plant in Ludwigshafen), the company has been undergoing a large-scale restructuring for some time. Thus, at the end of June, BASF completed the sale of 60% of its OEM and automotive refinish coatings business to the American investor Carlyle. The remaining 40% of the joint venture, called Surventis, is still owned by BASF, but the company is looking to divest itself of this asset completely. The company also plans to list its agrochemicals business on the stock exchange.
Evonik is also cutting costs, although it raised its profit forecast this summer. By the end of 2029, the company plans to cut another 3,200 jobs, including 2,150 in Germany. The chemicals company also announced the closure of its unprofitable polyester production facility with annual revenue of approximately 150 million euros. The company is systematically reducing the share of standard products in its portfolio, with further asset sales coming. In particular, Evonik is looking to divest its standard chemicals business, which is part of the “Performance Materials“ division.