Bayer to Seek Initial Public Offering for MaterialScience Arm
In a move both expected and unexpected - at least in terms of its timing - Bayer has announced plans to float its engineering plastics arm, Bayer MaterialScience.
In an ad hoc announcement, the Leverkusen, Germany-based group said the spin-off would allow it to position itself as a world-leading company in the field of human, animal and plant health. The supervisory board was to discuss the move at a meeting on Sept. 18.
Speculation that the Bayer plastics business worth more than €11 billion in annual sales could be spun off has been hanging over the market for years, but rumors gathered fresh momentum in April.
Analysts have long been urging the move, which would bring Bayer into line with a wider healthcare industry trend. News of the planned spin-off, which has a core profit margin of 9.5% compared with the group's 20.9%, lifted the group's share price to a record high.
While the performance of the MaterialScience unit has sagged in recent years as global overcapacity, especially for polycarbonate, dogs its markets, BMS results for the first half of 2014 showed adjusted sales up 4% to €5.7 billion, thanks to strong volume growth, while EBIT rose 77% to €328 million and EBITDA before special items by 33% to €636 million.
