Global Raw Material Giant #4 — Evonik: A Pioneer in Ceramide Product Innovation

Evonik, officially Evonik Industries AG, is a Germany-based global leader in specialty chemicals and a renowned major supplier of personal care raw materials worldwide. It provides ingredients to numerous internationally recognized cosmetics brands. Evonik operates in over 100 countries and regions globally; in 2023, its global sales amounted to €15.3 billion (approximately RMB 119.4 billion), with an operating profit of €1.66 billion (approximately RMB 13 billion). Evonik’s History Evonik’s origins trace back to a chemical laboratory established under the Frankfurt Mint in 1843. Thirty years later, Deutsche Gold- und Silber-Scheideanstalt (Degussa) was founded— one of Evonik’s predecessor companies, known as Degussa AG. Established in 1873, Degussa rapidly grew into a large multinational conglomerate, gradually shifting its business focus from metallurgy to chemicals. In 1999, Degussa Group merged with Hüls Group to form Degussa-Hüls Group, initiating a strategy of diversified development. In 2001, Degussa-Hüls Group merged with SKW Trostberg Group to establish a new Degussa Group headquartered in Düsseldorf. The ‘new’ Degussa Group consolidated the strengths of its predecessor entities and immediately began pivoting its operations toward specialty chemicals. Between 2003 and 2006, RAG Group—headquartered in Essen—acquired Degussa Group, making Degussa the chemicals division of Evonik Industries AG (formerly RAG Beteiligungs-AG). In 2007, RAG Group split into two independent entities: RAG Aktiengesellschaft, headquartered in Herne, focused on hard coal mining and processing; and Evonik Industries AG, headquartered in Essen, dedicated exclusively to specialty chemicals. Both companies are wholly owned by the RAG Foundation, with the new structure carefully designed to align with each entity’s operational specifics and market outlook. Evonik’s Four Business Divisions Currently, Evonik comprises four business divisions: Specialty Additives, Nutrition & Care, Smart Materials, and Performance Materials. ① Specialty Additives The Specialty Additives division covers a broad range of additives and high-performance crosslinkers, organized into five business lines: Coating Additives, Comfort & Insulation Materials, Crosslinkers, Interface & Functional Chemicals, and Fuel Additives. It leverages four core technology platforms: silicones, amines, methacrylates, and isophorone. ② Performance Materials The Performance Materials division has a long-standing heritage, continuously optimizing products and technologies to supply foundational raw materials for modern applications across transportation, nutrition, pharmaceuticals, plastics, and more. ③ Smart Materials The Smart Materials division delivers high-performance materials supporting energy-efficient and environmentally sustainable systems across industries including automotive, paints & coatings, adhesives, and construction.

BASF Advances Acquisition Bid for Evonik—and Holds Another Trump Card

If ultimately completed, this transaction would become one of the most significant consolidations in Germany’s chemical industry in recent years. BASF believes that the two companies possess complementary market positions and product portfolios; their merger could strengthen their collective global market standing and broaden customer reach. However, specific synergies and potential business adjustments remain formally undisclosed. The RAG Foundation: A Key Determinant of the Transaction Whether the deal proceeds hinges significantly on the stance of the RAG Foundation—the largest shareholder of Evonik, holding approximately 44% of its shares—and thus wielding decisive influence in any potential acquisition. One of the Foundation’s primary mandates is to use investment returns to fund long-term governance costs associated with Germany’s coal mine closures. Consequently, its investment portfolio must deliver both stable returns and sustained long-term asset value. To date, the RAG Foundation has not publicly declared support for BASF’s acquisition bid. Previously, the Foundation aimed to gradually reduce its stake in Evonik while retaining a minority shareholding of at least 25.1% to preserve its influence over the company. This implies that, to secure RAG’s backing, BASF may need to devise a transaction structure more flexible than a straightforward all-cash offer. Moreover, Bernd Tönjes—the Chairman of the RAG Foundation—also serves as Chairman of Evonik’s Supervisory Board, necessitating careful balancing between the Foundation’s investment interests and Evonik’s corporate interests. According to reports, it is currently not expected that the RAG Foundation would unilaterally push through a sale against the explicit opposition of Evonik’s management—though renewed trilateral negotiations among BASF, Evonik, and the RAG Foundation cannot be ruled out in the future. BASF’s ‘Trump Card’: Cash Plus Share Swap Should formal negotiations among all three parties commence, transaction structure—not just price—could become a critical leverage point for BASF. BASF initially proposed an all-cash acquisition of Evonik’s entire share capital. An alternative scenario, however, involves splitting the transaction: publicly traded Evonik shares would continue to be acquired by BASF using cash—estimated to require approximately €5 billion—while the RAG Foundation’s stake would be settled via a share swap, whereby RAG would exchange its Evonik shares for BASF shares. This portion of the transaction is estimated to be slightly below €5 billion. A key advantage of this approach is that BASF may not need to issue new shares. The company has already launched a large-scale share buyback program, targeting cumulative repurchases of approximately €4 billion by 2028. In theory, these treasury shares could serve as ‘payment instruments’ in the acquisition—enabling a share swap with the RAG Foundation without requiring additional capital issuance. However, according to informed sources, this structure is not currently BASF’s preferred option—but rather a viable alternative to be deployed during future negotiations. An IPO of the Agricultural Solutions Business Could Also Provide Funding BASF also holds another potential funding source: the planned initial public offering (IPO) of its Agricultural Solutions business.

Germany's RAG Foundation Could Sell Entire Evonik Stake

21 hours ago

The RAG Foundation confirmed it could sell its entire 43% stake in Evonik, following competitor BASF's recent takeover interest. Such a divestment requires board approval and would significantly impact the German chemicals sector.

reuters

2026-09-30

Germany's RAG Foundation Could Sell Entire Evonik Stake

Germany's RAG Foundation Could Sell Entire Evonik Stake

FAQ