Bayer plans to list plastics unit as early as October

German drugmaker Bayer plans to list its plastics division as early as October to take advantage of current rich stock market valuations, according to sources familiar with the deal. While a decision on the exact timing will be taken just days ahead of the actual launch of the initial public offering (IPO), Bayer wants to conclude preparations by late August, the sources said.
Bayer has said it aims to turn the unit - whose name will be changed to Covestro, from the current MaterialScience - into a legally separate and self-contained entity by September 1.
Analysts currently estimate the potential value of the plastics company at more than 10 billion euros ($11 billion).
Bayer is planning to make presentations to equity research analysts to allow them to make more informed valuation estimates for the unit in late July or early August, the sources said.
"They want to have everything ready so they can push the button and send out an intention to float as soon as possible after September 1 if market conditions are right," said one of the sources, adding that the IPO could take place one month later.
A Bayer spokesman reiterated previous statements that the plastics division would become a separately listed company by mid-2016 at the latest. He also said that Bayer would decide in the second half of 2015 whether it would pursue its preferred option of an IPO with cash proceeds for the parent, or a transfer of the subsidiary to its shareholders in a cash-free spin-off.
The spokesman declined to comment further.
The sources said that as part of the listing preparations, Bayer has also asked more banks to pitch for a role in the organisation of listing alongside IPO adviser Rothschild, and the global co-ordinators Morgan Stanley and Deutsche Bank.
JP Morgan, Citi and UBS are seen as most likely to act as so-called bookrunners, but official mandates have not been awarded yet, the sources said. Those three banks declined to comment.
Buoyant equities markets have prompted some companies to bring IPO plans forward, eager not to miss the current high valuations, and to make sure to use a "market window" before it closes due to any sudden external shock like a political crisis.