Germany’s BASF, one of the world’s largest chemical companies, has approached fellow German chemicals producer Evonik over a potential takeover. The proposed deal could strengthen BASF’s portfolio as European chemical companies face increasing competition from China. BASF said it continuously evaluates acquisitions that strengthen its core businesses, offer a strong strategic fit, support profitable growth and create value. The company confirmed that it is currently holding exploratory discussions with Evonik. Meanwhile, Evonik said it had received a non-binding approach from BASF regarding a voluntary public takeover offer for all of its shares. The RAG Foundation, which holds a 43% stake in Evonik, also confirmed that BASF had contacted it regarding a potential takeover.
Complementary Chemical Product Portfolios
A potential BASF-Evonik combination would bring together complementary product portfolios. Evonik produces high-tech plastics, feed additives and ingredients used in coatings and household products. BASF, meanwhile, manufactures engineering plastics, superabsorbent polymers, vitamins and a broad range of chemicals for industrial applications. The complementary businesses could help BASF strengthen its position in specialty chemicals while potentially improving capacity utilisation. Arne Rautenberg, head of equities at Union Investment, said the proposed acquisition could provide a sound business case by strengthening BASF’s specialty chemicals position and increasing capacity utilisation.
European Chemicals Industry Faces Pressure
Both companies operate extensively in Europe, which remains an important market for their businesses. However, the European chemicals industry has faced pressure from high energy costs and weak demand. At the same time, BASF has been seeking to increase the contribution of Asia and other international markets to its revenue. BASF CEO Markus Kamieth said in June that the company was facing its most difficult business environment in at least 25 years. He also pointed to the continuing shift in global industrial power towards Asia.
Competition from Chinese Chemical Producers
The potential Evonik acquisition comes as European chemical companies seek ways to strengthen their global competitiveness. BASF is also facing the possibility of losing its long-standing position as the world’s largest chemical company by revenue to China’s Sinopec. Against this backdrop, a potential combination with Evonik could reshape BASF’s portfolio and strengthen its presence in selected specialty chemical markets. As reported by reuters.com, the BASF-Evonik discussions remain at an exploratory stage, and the final outcome of the potential takeover is yet to be determined.
