SHARE SALE

Bayer Cuts Stake in Covestro Ahead of Monsanto Takeover

Bayer AG 47253094
Bayer is slowly pulling out of Covestro. Source: DPA

Bayer said Wednesday it had cut its stake in its spin-off Covestro from 64.2 percent to 53.3 percent, moving the chemicals and pharmaceuticals giant a step closer to exiting its plastics subsidiary altogether.

Bayer sold 22 million Covestro shares on Tuesday night at €66.50, or $70.06, a piece to institutional investors, raising nearly €1.5 billion. It plans to use the proceeds to reduce debt.

Bayer’s net debt position currently stands at around €12 billion. Reducing the debt pile would strengthen the company’s balance sheet ahead of its blockbuster $66-billion acquisition of U.S. seed maker Monsanto.

Currently valued at €14 billion, Covestro has seen its stock price rise by more than 100 percent since the start of 2016.

Covestro’s shares were down 2.6 percent at €65.10 by 08:58 A.M. local time in Frankfurt, according to data from alternative trading platform Lang & Schwarz. The stock had closed at €71.07 on the Frankfurt Stock Exchange on Tuesday.

Leverkusen-based Bayer said Tuesday evening after market close it could sell up to 29 million shares, representing a 14 percent stake in Covestro and a volume of €1.9 billion ($2.01 billion) based on the company’s share price that day.

Covestro, a spin-off of Bayer’s material science division, went public in the fall of 2015 and is now Germany’s third-largest chemicals company with annual revenues of €12 billion.

Currently valued at €14 billion, Covestro has seen its stock price rise by more than 100 percent since the start of 2016 due to its rising sales volume and margins.

Covestro is a leading manufacturer of polyurethanes used in foams and polycarbonates used in cars, sports equipment and roofing for buildings. Bayer reiterated it would fully divest its stake in Covestro over the coming years.

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!