Private equity firms are circling Bayer’s €10bn plastics business merger, hoping to divert the German drugmaker from its plan to list the division, two people familiar with the matter said yesterday.
Advent, Carlyle, Cinven, CVC and KKR are among those eyeing MaterialScience after Bayer said in September that it planned to spin off the division through a listing, helping it focus on its more profitable life sciences business.
Given the size of the asset, the funds are also in discussions to form consortia, potentially with investors, including sovereign wealth funds (SWFs).
“All the SWFs and pension funds are being drafted in,” one of the sources said.
Bayer, Advent, Carlyle and KKR declined to comment. CVC and Cinven were not immediately available to comment.
The sources added that funds may wait until Bayer publishes full-year results next February before deciding on a bid.
Bayer MaterialScience’s products include panoramic roofs for expensive cars, transparent plastics for blu-ray discs and chemicals for insulation.
Reuters reported in September that Rothschild had been appointed to advise on the listing.
However, market conditions for initial public offerings (IPOs) have weakened in recent weeks, forcing a number of companies to pull their listings and potentially heightening the attractiveness of a sale to private equity firms eager to deploy large pools of unused capital.
Equinet analysts have valued MaterialScience at almost €10bn, while brokerage DZ Bank has said it is worth about €11bn, including debt.
The division, which has been hit by big increases in raw materials costs, has profit margins of less than half the average across the Bayer group.
Shares hit record highs after the corporation declared its intention to spin off the business in the next 12-18 months.
Material Science generated adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of €1.2bn in the 12 months to June, 14% of the group total.
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