MOSCOW (MRC) - Private equity firms are circling Bayer's 10 billion-euro (USD12.7 billion) plastics business, hoping to divert the German drugmaker from its plan to list the division, said Reuters.
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 stock market 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.
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 10 billion euros, while brokerage DZ Bank has said it is worth about 11 billion euros 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.
MaterialScience generated adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of 1.2 billion euros in the 12 months to June, 14% of the group total.
As MRC wrote before, Bayer MaterialScience expands technology and production by investing in a new ultra-modern technical centre for polyurethane foams and new production plant for coating raw materials. The total investment in both is more than EUR 45 million.
With 2013 sales of EUR 11.2 billion, Bayer MaterialScience is among the world’s largest polymer companies. Business activities are focused on the manufacture of high-tech polymer materials and the development of innovative solutions for products used in many areas of daily life. The main segments served are the automotive, electrical and electronics, construction and the sports and leisure industries. At the end of 2013, Bayer MaterialScience had 30 production sites and employed approximately 14,300 people around the globe. Bayer MaterialScience is a Bayer Group company.
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