BASF Raises Evonik Offer to €24 a Share, Sources Say, Valuing Target at €11.18 Billion

BASF has raised its takeover offer for Evonik Industries to about €24 per share, according to two people close to the matter who spoke to Reuters on Friday, Oct. 23. The price would value Evonik at roughly €11.18 billion ($12.51 billion). Bloomberg News first reported the increase to more than €11 billion.

The earlier approach was about €22.15 per share, or around €10.3 billion. Sources say Evonik turned that down in September as too low.

BASF and Evonik both declined to comment on the price, as did Evonik's largest shareholder, the RAG Foundation. The higher figure is a reported proposal, not an agreed deal.

Where the stock stands

Evonik shares closed Friday 2.7% higher at €21.26, below the reported €24 offer price. BASF shares rose 0.15%.

MKI Global Partners said investors expect an offer above €24. "Maybe €24.50 is needed to get Evonik to the negotiation table," the firm said, adding that "an agreed deal could ultimately take place at around €25, depending on the concessions required by BASF."

That is an analyst's estimate, not a price anyone has put on the table.

The jobs pledge

The reported increase came a day after BASF CEO Markus Kamieth published a video message on Thursday, Oct. 22, laying out commitments in the event of an acquisition. He said BASF would honor Evonik's existing site agreements, including the exclusion of compulsory redundancies through 2032, along with collective bargaining and training commitments.

Kamieth also described plans to keep a significant presence in Essen and North Rhine-Westphalia, including board-level representation and corporate functions, and to strengthen research and development. BASF said it would examine continued operation of the Marl and Wesseling chemical parks.

Those are conditional intentions, not a finished integration plan. The Marl and Wesseling language is a commitment to review, not to keep.

BASF also warned Thursday that more painful takeover approaches from abroad were looming.

The skeptics inside the tent

BASF's own works council is not handing over a blank check. Chairman Sinischa Horvat said any takeover "must be judged on the basis of the prospects it opens up for the companies, their sites and, above all, for the workforce."

"Our existing site agreement remains in force," Horvat said. "It must not be called into question by a potential takeover, nor must it be undermined by its financing or the resulting costs."

The state government of North Rhine-Westphalia, where Evonik is based, said earlier this month that jobs at Evonik and its independent development must not be jeopardized by a takeover.

The foundation holds the key

RAG-Stiftung is the pivotal player. The private, non-profit foundation holds about 43% of Evonik, its largest single investment, according to dpa. Its primary task is the permanent financing of the follow-up costs of German hard coal mining, which was shut down in 2018, and those costs are covered from numerous capital investments, including Evonik.

Its board of trustees has 13 members, mostly politicians. Five sit ex officio: the prime ministers of North Rhine-Westphalia and Saarland, the federal economics and finance ministers, and the chairman of the IG BCE union.

Michael Vassiliadis, who leads the IG BCE union, also sits on BASF's supervisory board, according to Briefs Finance. So the price, the jobs guarantees and the politics all run through the same small group of people.

The companies and RAG-Stiftung confirmed at the end of September that a takeover offer existed.

The Ashland wrinkle

On Thursday, Evonik's interest in buying U.S. specialty chemicals firm Ashland, valued at around $3.3 billion, surfaced. Two people familiar with the matter told Reuters that Evonik's interest began before BASF launched its bid.

A source close to the matter said BASF considers an Evonik purchase of Ashland too risky. No agreement between Evonik and Ashland has been reported.

BASF's own house

BASF has a market capitalization of around €47 billion, according to Briefs Finance. Over the summer it sold a majority stake in its coatings arm to Carlyle Group and it is preparing its Agricultural Solutions division for a possible Frankfurt listing.

A deal would add Evonik's higher-margin specialty lines, including additives, adhesive resins and high-performance polymers, to BASF's engineering plastics, superabsorbent polymers, vitamins and industrial chemicals.

Talks are continuing and may not produce a deal. The open questions are whether RAG-Stiftung's trustees accept a price near €24 or hold out for something closer to the €25 MKI Global Partners floated, and whether Evonik's board stays on the Ashland path or drops it.