Covestro, the former Bayer MaterialScience, will be elevated to the German index of blue-chip companies, DAX, from Mar. 19. The Leverkusen-based engineering plastics producer will replace media conglomerate ProSiebenSat.1 in the index of the country’s 30 largest public companies in terms of market capitalization.
The German stock exchange commission, Deutsche Börse, admitted Covestro under the fast-entry rule, which allows a company to enter ahead of the stock exchange’s regular review if it ranks among the biggest 25 companies in terms of market capitalisation and turnover. The next regular review is due in June of this year.
Inclusion in the DAX qualifies the stock for funds that passively track the index and for large-cap portfolio managers that use the index to assess investments.
Covestro CEO Patrick Thomas called the blue-chip listing “a further confirmation of the successful development of our company in recent years and the attractiveness of our share.” The stock’s value rose by just under 38% over the past six months, thanks to a good financial performance but also to a share buyback scheme that enabled the plastics producer to buy back 10% of its capital.
Since its stock market debut in 2015, Covestro's market capitalization and free float have increased continuously, the company noted. Two months after its initial public offering, the former Bayer sub-group was listed in the M-DAX index of the top 50 mid-cap companies. It has been a member of the STOXX Europe 600 since spring 2016.
Through share placements with institutional investors, Bayer has continuously reduced its stake in its former subsidiary. As of March 5, 2018, Covestro’s free float was around 86%, and its market capitalization around €7.6 billion.
Over the past year alone, the former parent sold Covestro stock worth €4.7 billion. With its latest share sale, which served to free up more cash for its $63.5 million takeover of US agrochemicals group Monsanto, the group now focused on life sciences reduced its stake to 14.2%.
