MOSCOW (MRC) -- Covestro AG gained as much as 12% on the first day of trading after slumping global stock markets forced the plastics maker owned by Bayer AG to cut the size of its initial public offering by 40%, said Bloomberg.
The stock rose 11% at 26.55 euros at 10:39 a.m. in Frankfurt. Shares in the Leverkusen, Germany-based company had been priced at 24 euros after cutting the range from an originally targeted 26.50 euros to 35.50 euros. The sale was more than three times over-subscribed, Chief Financial Officer Frank Lutz said on Tuesday.
Covestro’s reduced IPO comes a few days before that of Schaeffler AG, with the auto-parts supplier also having to cut the size of its offering by more than half. Turmoil on stock markets with a slowdown in China and a rout in Volkswagen AG shares have hurt demand for equities. Rather than postpone, Bayer provided an extra 1 billion euros (EUR1.1 billion)to its unit to make up for reduced proceeds.
"It wasn’t difficult at all" persuading Bayer to give the extra money, Lutz said to journalists at the bell-ringing ceremony at the Frankfurt stock exchange Tuesday. "We wanted to be on the market and it gives Bayer flexibility to sell the rest of their shares."
Covestro fixed the proceeds from the share sale at 1.5 billion euros, leaving the number of shares to be sold dependent on the issue price. The maker of foam ingredients for mattresses and polycarbonates for car parts will pay down debt to Bayer, whose stake was diluted to 69%.
As MRC imformed earlier, from September 1, 2015, Bayer MaterialScience became known as Covestro. Bayer aims to float this business on the stock market by mid-2016 at the latest. The plans for the carve-out of Bayer MaterialScience were announced in September 2014.
Bayer is a global enterprise with core competencies in the fields of health care, agriculture and high-tech polymer materials. As an innovation company, it sets trends in research-intensive areas. Bayer's products and services are designed to benefit people and improve their quality of life. At the same time, the Group aims to create value through innovation, growth and high earning power. Bayer is committed to the principles of sustainable development and to its social and ethical responsibilities as a corporate citizen. In fiscal 2014, the Group employed 118,900 people and had sales of EUR 42.2 billion.
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