Covestro buys DSM's resins unit for 1.6 billion euros

Covestro buys DSM's resins unit for 1.6 billion euros

Reuters  | Sep 30, 2020 11:35

Covestro buys DSM's resins unit for 1.6 billion euros

By Ludwig Burger

FRANKFURT (Reuters) - Germany's Covestro (DE:1COV) will buy Dutch peer DSM's (AS:DSMN) Resins and Functional Materials business for about 1.6 billion euros (1.5 billion pounds), banking on a rebound of a global economy depressed by the coronavirus pandemic.

The deal, which will likely be wrapped up by March 2021, adds products such as coatings for optical fibres, buildings and cars, recyclable carpets and printable plastics.

The new business will add about 1 billion euros in revenues to Covestro's Coatings, Adhesives, Specialties (CAS) division, it said in a statement on Wednesday.

The company has swiftly rebounded from a slump due to the coronavirus pandemic earlier this year, and finance chief Thomas Toepfer expected that trend would continue into the fourth quarter.

Covestro has shunned larger takeovers since it was spun off from Bayer (DE:BAYGn) in 2015, mainly because expanding its two main units - makers of transparent polycarbonate plastics as well as chemicals for insulation slabs and upholstery foams - would trigger antitrust pushback.

The smaller but more profitable CAS unit makes additives for coatings and adhesives, competing with DSM, Evonik (DE:EVKn), Vencorex of France and Wanhua Chemical (SS:600309).

For its part, DSM said it would hone in on its nutrition and health business, with products such as vitamins, baby formula and animal feed accounting for two thirds of its 2019 group sales of 9 billion euros.

Covestro shares fell 6.8% at 0915 GMT as analysts said the deal's merit depends on ambitious annual synergies of 120 million euros targeted by Covestro by 2025, 80 million from lower costs and the remainder from new revenue opportunities. DSM stock gained 4.3%.

CFO Toepfer said exclusive talks with DSM had allowed Covestro to have 150 experts scan the target for synergies.

"We are convinced these are ambitious but absolutely realistic numbers," he said.

The buyer plans to sell new shares worth 450 million euros to help fund the deal.Covestro this month said it was not in talks to be taken over by Apollo Global Management (N:APO), reacting to a report that the private equity firm was exploring a takeover.

© Reuters. The logo of German chemicals maker Covestro is pictured outside its headquarters in Leverkusen

Barclays (L:BARC) acted as financial advisor to Covestro.

Related News

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
Saving Changes


Download the App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors. is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.