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09-08-2015

Bayer Plans IPO for Covestro

Bayer AG, Leverkusen, Germany, has taken the decision to proceed with an Initial Public Offering (IPO) of Covestro AG, a polymers company formerly known as Bayer MaterialScience. Covestro will seek a listing in the regulated market segment (Prime Standard) of the Frankfurt Stock Exchange.

The offering will consist solely of new shares issued by Covestro by way of a capital increase. They will be offered publicly in Germany and Luxembourg to private and institutional investors. Outside of these countries, shares will be offered by way of private placements. Subject to capital market conditions, Covestro’s IPO is expected to be completed in the fourth quarter of 2015.

Covestro intends to use the proceeds from the IPO primarily to repay intercompany debt to Bayer and in this way to establish its target capital structure. With net debt including pension liabilities at 2.5 to 3.0 times adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for fiscal 2015, Covestro is seeking an investment-grade credit rating.

Dr. Marijn Dekkers, CEO of Bayer AG, said: “We have been evaluating the optimal way for the separation of the MaterialScience business and believe that an IPO delivers clear benefits for both Bayer and Covestro and their stakeholders. This transaction will allow both businesses to pursue their strategic goals.”

Covestro is aiming for mid-term growth of its net sales and adjusted EBITDA. According to the Combined Financial Statements, the company achieved net sales of EUR 11.761 billion and adjusted EBITDA of EUR 1.161 billion in fiscal 2014. Its financial outlook is driven by increasing utilization of its asset base and a disciplined cost focus. The anticipated growth in demand is expected to result in higher utilization of recently expanded capacities. A limited need for new asset investment should further support growth in free cash flow. In addition, Covestro plans to align overall costs with best-in-class chemical industry benchmarks. This together with targeted asset optimization is expected to generate total gross savings of around EUR 420 million by 2019.

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