German industrial group RAG (D-45128 Essen; www.rag.de) will take a controlling interest in chemicals and plastics producer Degussa (D-40474 Düsseldorf; www.degussa.com) if plans by Degussa´s parent company E.on (D-40474 Düsseldorf; www.eon.com) to swap the company for RAG´s stake in gas utility Ruhrgas are approved. Germany´s cartel authority, Bundeskartellamt, has turned thumbs down on the plan; however, E.on has applied to the German economics ministry to override the veto. A decision is expected in July.

If the swap deal goes ahead, RAG would initially make a takeover offer to Degussa´s minority shareholders and E.on would shed some of its shares to give each a 30% stake. In May 2004, RAG would acquire additional shares from E.on, lifting its Degussa stake to 50.1%. RAG already owns 100% of plastics and chemicals group Rütgers (D-45128 Essen; www.ruetgers.de).

RAG said Degussa, parent company of MMA/ PMMA specialist Röhm, would remain independent, with a considerable percentage of its shares in free float. However, it hinted that there might be some scope for cooperation between Degussa and Rütgers (Bakelite, Isola and HT Troplast). Pointing to the lack of overlap or visible synergies, analysts say a partial merger of speciality chemicals on the one side and plastics on the other is a possible scenario when RAG obtains the majority.