Evonik Rejects €10.3 Billion Takeover Bid From Rival BASF, FT Reports

German specialty chemicals company Evonik Industries AG (ETR:EVKn) has rejected a €10.3 billion ($11.7 billion) takeover offer from its larger domestic rival BASF SE (ETR:BASFn), the Financial Times reported, citing people familiar with the matter.

Offer Details

BASF's unsolicited proposal valued Evonik at approximately €22.15 per share, according to the report. This price represented a premium of nearly 29% to Evonik's share price before takeover speculation emerged, assigning the company an enterprise value of around €14.2 billion.

Evonik's management reportedly rebuffed the offer, deeming the valuation too low to warrant formal negotiations or to grant BASF access to conduct due diligence. The rejection is expected to increase scrutiny on Evonik's board and its largest shareholder, the RAG-Stiftung foundation, as investors assess the decision.

Strategic Context and Sector Pressures

The bid represents a significant consolidation move by BASF Chief Executive Markus Kamieth amid a challenging environment for Europe's chemical industry. The sector is contending with elevated energy costs, global overcapacity, and persistent weak demand, while facing stiff competition from U.S. and Chinese rivals.

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In a statement, BASF reiterated that an acquisition would strengthen its core portfolio but noted that realizing potential synergies would require engagement from Evonik. The news was met with caution from BASF investors, who sent the company's shares down nearly 4% on concerns over the financial burden and execution risks of such a large-scale integration.

Key Shareholder in Focus

The outcome of any future negotiations will likely hinge on the position of the RAG-Stiftung foundation, which holds a 44% stake in Evonik. The state-backed foundation is tasked with funding Germany's perpetual obligations from former coal mining operations.

Given that its board includes prominent political and labor union figures, any potential transaction would face a rigorous evaluation. Key considerations would include guarantees on employment, the future of manufacturing sites, and the deal's alignment with Germany's long-term industrial strategy.