Evonik's Takeover Saga: A Union Boss's Dilemma, a €10.3 Billion Rejection, and a 43% Stake in Play

IGBCE's Vassiliadis recuses himself from BASF talks as RAG-Stiftung weighs selling its 43% Evonik stake after a €10.3B bid was rejected.

Michael Vassiliadis, the powerful head of Germany's IGBCE mining and chemicals union, finds himself walking a diplomatic tightrope as BASF circles Evonik. His dual roles—a supervisory board seat at BASF and the deputy chairmanship of the RAG-Stiftung's board of trustees—have thrust him into a delicate position, according to a report by the Frankfurter Allgemeine Zeitung. To sidestep potential conflicts of interest, Vassiliadis has reportedly recused himself from BASF's decision-making processes.

His tenure on the Ludwigshafen-based company's supervisory board stretches beyond twelve years, while his IGBCE mandate runs through 2029. For workers on both sides of the negotiating table, he is pushing for binding commitments on future prospects and investment pledges. Talk of his ambitions to lead the RAG-Stiftung remains unconfirmed; the contract of current chairman Bernd Tönjes is set to expire in 2028.

The union leader's balancing act pits employee protections against his fiduciary duties to two chemical giants with opposing objectives in the current bidding war.

RAG-Stiftung's High-Stakes Position

For the RAG-Stiftung, which owns slightly more than 43% of Evonik, the unfolding drama carries existential weight. Last year, the Essen-based foundation received €252.5 million in dividends from the specialty chemicals group. That sum fell short of covering its ongoing obligations, as perpetual costs tied to hard coal mining reached €309 million.

The foundation oversees assets of roughly €16 billion and has set aside €10 billion in provisions. Despite the takeover maneuvering, no extraordinary meeting of its supervisory body has taken place, per FAZ. A regular trustee meeting is scheduled for late November.

Leadership Gap Complicates the Chessboard

A vacancy at the top of Evonik adds another layer of complexity. CEO Christian Kullmann is out until at least the end of the year following surgery, leaving Claus Rettig to steer the Essen-based company on an interim basis during this critical period.

Evonik's management rejected an initial BASF offer worth €10.3 billion just over a week ago. While the board turned away the first approach, the question of fair valuation is increasingly front and center for investors.

The stock closed Friday at €20.66, giving Evonik a market capitalization of €9.58 billion. That leaves the shares 0.4% below their 52-week high. Since the start of the year, the stock has climbed 55%.

Analysts Sound a Cautious Note

On September 28, J.P. Morgan weighed in on the strategic and financial rationale of a potential tie-up between the two chemical companies. The analysts kept their rating on Evonik at "Underweight" and set a price target of €14.

That stance underscores the deep-seated reservations observers hold about such a transaction. Merging two German chemical giants would bring complex integration challenges, and it remains unclear what synergies could justify the lofty valuation expectations.

How the Bidding War Unfolded

BASF confirmed on September 25 that it had entered exploratory talks with Evonik and the RAG-Stiftung regarding a possible takeover, with the outcome and trajectory still open. Evonik subsequently acknowledged an unsolicited approach for a public takeover offer covering all shares but stressed that no negotiations were currently underway.

Roughly a week ago, the company turned down a bid of around €22.15 per share, according to Reuters, deeming it too low. The rejection reflects Evonik management's confidence in the company's value. A successful bid would require not only the approval of the Essen leadership but also hinges heavily on the plans of its major shareholder.

On Wednesday, the RAG-Stiftung told Reuters it could sell its entire stake in Evonik, which Reuters estimated at approximately 43%. The anchor shareholder's willingness to sell could reignite talks should BASF or another bidder sweeten its offer. For market participants, the focus now shifts to the price that would ultimately be needed to secure a majority.