Bayer is inviting financial investors to bid for its 60 percent stake in chemical park operator Currenta after initially failing to agree a sale to its former chemicals subsidiary Covestro, three people familiar with the matter told Reuters.
Bayer, which is focusing on healthcare and crop protection after the takeover of U.S. seed maker Monsanto, has mandated Morgan Stanley to help with the transaction. Buyout firms and infrastructure investors have been asked to put in initial bids by the middle of October, the sources said.
Currenta, which operates infrastructure facilities at German chemical complexes in Leverkusen, Dormagen and Krefeld-Uerdingen, could be valued at upwards of 1 billion euros ($1.2 billion) and possibly more than 2 billion, according to one of the sources.
Covestro, Morgan Stanley and Bayer declined to comment.
Currenta’s three industrial sites were once dominated by Bayer but after the drugmaker’s staggered exit from the production of industrial chemicals and plastics, Bayer no longer plays a major role among Currenta’s more than 70 customers.
Bayer needs to rebuild its financial firepower after the $63 billion takeover of U.S. seeds maker Monsanto.
It is competing with larger pharma rivals as it bids for the rights to promising new treatments from biotech firms to try to strengthen its drugs development pipeline.
Despite the widened group of prospective buyers, a sale to Covestro, whose products include transparent plastics for road-side noise barriers and panoramic car roofs, can still not be ruled out.
“Covestro is half in, half out. They’re just not finding any common ground,” said one of the sources, describing the state of negotiations with Bayer.
Currenta mainly supplies Bayer’s former subsidiaries Covestro and the special chemicals company Lanxess, which owns the remaining 40 percent in Currenta, with electricity, steam and natural gas.
It also provides services including transportation, maintenance, waste management and workers’ safety and employs 3,200 staff.
Even prior to Covestro’s 2015 carveout from Bayer and subsequent stock-market listing, no internal agreement could be reached about transferring Bayer’s Currenta stake to Covestro, even though the subsidiary was set to replace its parent as Currenta’s main customer, the sources said.
Standard & Poor’s cut its credit rating of Bayer to triple-B in the wake of the Monsanto deal and Bayer has vowed to pay back debt to return to a single A rating over the long run.
Covestro, in turn, is buying back shares and has bolstered its investment ambitions, banking on stable demand for specialty materials even beyond the industry’s current upswing.
The maker of transparent polycarbonate plastics and chemicals for padding foam in mattresses and car seats expects to rake in more than 2 billion euros in cash flow after investment expenditure this year, boosted by stronger-than expected demand. ($1 = 0.8579 euros)
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