Patrick Thomas and Franz Lutz, respectively CEO and CFO of engineering plastics producer Covestro (Leverkusen / Germany; www.covestro.com), the former Bayer MaterialScience – as well as the managing board of the Bayer group (www.bayer.com) – had good reason to be pleased with the 6 October launch of the new company’s shares on the Frankfurt Stock exchange. The paper, finally priced at EUR 24 after a turbulent book-building phase, was trading at well over EUR 26 – a more than 12% gain – near the end of its first day (see Plasteurope.com of 23.09.2015).

“We are proud to be a stock market-listed company,” Thomas said. Days earlier, Bayer and Covestro had revised downward their initial expectations for the share pricing and postponed the launch by four days due to a “significant” deterioration of the capital market situation. Factors of uncertainty included the market’s nervousness about the economy of China, where Bayer’s plastics sub-group is heavily invested, along with the US Federal Reserve’s failure to raise interest rates and what was euphemistically described as “negative headlines from the automotive sector.”

In advance of book-building, Bayer and Covestro had hoped to raise EUR 2.5 bn through the launch of shares priced at EUR 26.50-35.50. However, expectations were subsequently corrected downward to EUR 1.5 bn and a price range of EUR 21.50-34.50. To make up the difference, Bayer agreed to bridge the gap of EUR 1 bn to keep the new company’s net indebtedness unchanged at the envisaged EUR 4 bn.

The Covestro shares are being offered to investors through the stock exchange in Luxembourg in addition to Frankfurt. With the launch, Bayer has initially reduced its ownership in the plastics producer to 69% and plans to reduce it further in future. The share sale was more than three times over-subscribed, Lutz told journalists attending the stock market kick-off, where colourful polycarbonate glasses were handed out to invited guests.