BASF reportedly lifts Evonik bid above €11 billion with job pledges

BASF has reportedly increased its bid to take over Evonik to over €11 billion (US$12.3 billion). 

The German chemical giant previously offered Evonik about €22.15 (US$25.16) per share, valuing Evonik’s equity at roughly €10.3 billion (US$11.7 billion). However, that was reportedly declined as too low. 

The increased offer of €24 (US$26.83) per share was reported by Bloomberg, with the publication citing people familiar with the matter. 

“Investors expect an offer of above €24, maybe €24.50 (US$27.40) is needed to get Evonik to the negotiation table,” said MKI Global Partners, according to Bloomberg. The advisory firm added that an agreed deal could end at around €25 (US$27.96), depending on the concessions required by BASF.

The new proposal represents a premium of approximately 38% to Evonik’s share price before takeover speculation emerged in September. That figure is up from nearly 29% under BASF’s initial bid, a premium that the Financial Times called “sizable” at the time. 

Job and site guarantees

BASF has reportedly pledged to protect Evonik workers’ jobs and production sites, including honoring its existing employment guarantees until 2032. 

Evonik’s headquarters in Essen would also remain an important location for the combined business, the sources said.BASF reportedly raises its offer for Evonik. 

Evonik shares rose 5.2% on the Frankfurt Stock Exchange on Friday. The stock later narrowed to 2.6% at €21.24 (US$23.75), giving the company a market value of around €10 billion. 

RAG-Stiftung holds the key 

Any deal is likely to hinge on RAG-Stiftung, Evonik’s largest shareholder. RAG-Stiftung holds approximately 44% of Evonik’s equity, thus no full integration can happen without the German private-law foundation’s approval. 

BASF has previously confirmed it is in exploratory talks with RAG-Stiftung and Evonik over a potential takeover. The chemicals group has stated that discussions are open, but that it will not comment on price. 

Bloomberg reported that the people familiar with the matter said deliberations are ongoing, and there’s no certainty they’ll result in a transaction. 

Sector under pressure

Evonik and BASF are significant ingredient suppliers in the beauty industry. The companies have an overlapping presence in skin care actives and sustainable formulation ingredients, often competing for the same customers. A combination would bring two of the sector’s major upstream suppliers under one roof.

BASF CEO Markus Kamieth previously told the Financial Times the potential takeover aligns with broader efforts to streamline operations, reduce overhead, and reposition the company toward higher-margin markets. 

Europe’s chemicals sector is facing weaker demand and global overcapacity, which has led to plant closures, layoffs, insolvencies, and asset sales across the industry. Kamieth has said that the global balance of industrial power is shifting to Asia. 

Exemplifying this, last year, BASF’s group revenue of €59.7 billion (US$68.9 ⁠billion) was almost the same as that of the chemicals segment of China’s Sinopec — revealing that BASF is at risk of losing its years-long rank as the world’s largest company by chemicals revenue to the Chinese state-owned oil and petrochemicals giant. BASF reportedly pledges to protect Evonik jobs. 

Kamieth has argued that combining Evonik and BASF would give the companies the scale to compete with Chinese rivals. A BASF company source previously told Reuters that a takeover would strengthen customer-facing business and reduce dependency on the European market. 

Evonik has also been hit by weak economic growth and fiercer international competition. The company is currently undergoing a cost-cutting and restructuring program. 

In June this year, it announced cutting 3,200 jobs globally between 2027 and 2029, as it expanded its cost-saving program that was initially set to conclude next year. The labor reductions came on top of approximately 2,800 positions that the company already announced would be axed from October 2023 through the end of 2026.

The cuts highlight the pressure facing both companies as they weigh a deal.