Bayer to further cut Covestro Stake

Germany’s Bayer group has announced it will further reduce its stake in its former Bayer MaterialScience engineering plastics subgroup, which currently trades as Covestro.

The latest stock reduction comes not quite two years after the initial public offering of the plastics producer on the Frankfurt stock exchange in October 2015. Bayer currently holds 53.3% of Covestro’s equity. 

The two-pronged stock placement was launched after the close of trading on Jun. 6 through an accelerated bookbuilding procedure with a targeted volume of €1 billion. Bayer is additionally offering bonds worth €1 billion, exchangeable into Covestro shares maturing in 2020.

The news agency Reuters has calculated that the shares sold could be worth €530 million based on the lasgt closing price, taking the combined value of the transactions to €2.53 billion.

Placements were addressed exclusively to institutional investors, with Barclays and Morgan Stanley acting as joint bookrunners, and Bayer said it has also agreed to a lock-up period of 90 days.

At the same time, the Leverkusen group, which is preparing to merge its agrochemicals business with US giant Monsanto, will deposit 8 million Covestro shares in Bayer Pension Trust, a contractual trust arrangement for pension finance, in the near future.

Bayer said this package amounts to 4% of Covestro’s shares and will be subject to the same lock-up period of 90 days.

The former chemical giant, which has shifted its emphasis to Life Sciences, said the transactions offer it the opportunity to further reduce its holding in Covestro, although it will continue to hold the majority stake and will still consolidate the engineering plastics maker in its financial statements.

Without giving a timetable, Bayer said it still aims to shed its entire shareholding in the company in the medium term.