Germany’s biggest chemicals maker wants to buy its smaller rival. On Friday, September 25, Evonik confirmed it had received a non-binding approach from BASF for a voluntary public takeover offer covering all of its shares. BASF later confirmed it has held exploratory talks with Evonik and with Evonik’s largest shareholder, the RAG Foundation, while stressing that the “course and outcome” of those talks remain open.
Investors did not wait for clarity. Evonik shares closed about 7.2% higher on Friday while BASF stock fell roughly 3.6%, the classic takeover pattern: the target jumps on the premium investors expect, and the bidder dips on the bill it will have to pay.
This is no small transaction. BASF carries a market capitalization of about 45.8 billion euros ($52.2 billion), while Evonik is valued near 9.2 billion euros. Together the two companies generated roughly 74 billion euros in revenue last year. The Financial Times, which first reported the approach, said BASF has been working with advisers on a possible deal since earlier this year, aiming to build a German champion that can stand up to Chinese and American competitors.
The key to everything sits in Essen, not Ludwigshafen. The RAG Foundation, which holds roughly 43 to 44% of Evonik, confirmed it had been contacted by BASF. Without its support, no deal happens. Evonik also noted that, despite the approach, no actual talks are taking place right now, and said it would not comment further beyond its legal obligations.
Why now? Because European chemicals are having a rough decade, and this year may be the roughest yet. Germany’s chemicals industry association, the VCI, said in September that it expects production to fall 1.5% this year. BASF chief executive Markus Kamieth said in June that the business environment was the most difficult in at least 25 years, with the global balance of industrial power shifting to Asia. Rising energy costs and weaker demand have squeezed margins across the sector. BASF is getting a temporary lift because Asian rivals have been hit harder by supply cuts tied to the war in the Middle East, but executives have been blunt that the longer-term picture is unforgiving.
There is reason for caution about how far this goes. Dealreporter reported earlier in the week that BASF had explored a possible Evonik deal this year, but one source downplayed the odds, describing BASF as “cash constrained” and suggesting the company would finish its Agricultural Solutions IPO before attempting an acquisition. Regulatory scrutiny would also be significant, even with a more deal-friendly posture in Brussels.
What to watch next: whether the RAG Foundation signals any openness, whether BASF formally launches an offer, and what price it would take to win over Evonik’s board. For now, the market has priced in possibility, not certainty. In an industry where scale is survival, though, this approach tells you plenty about how the giants see the road ahead. They do not think they can go it alone.
