Covestro buys DSM's resins unit for 1.6 billion euros

FILE PHOTO: The logo of German chemicals maker Covestro is pictured outside its headquarters in Leverkusen, Germany, July 26, 2019. REUTERS/Wolfgang Rattay

FRANKFURT (Reuters) – Germany’s Covestro 1COV.DE will purchase Dutch peer DSM’s DSMN.AS Resins and Functional Materials business for about 1.6 billion euros ($1.88 billion), banking on a rebound of a global economy depressed by the coronavirus pandemic.

The new business will add about 1 billion euros in revenues and 141 million euros in earnings before interest, taxes, depreciation and amortisation (EBITDA) to Covestro’s Coatings, Adhesives, Specialties (CAS) division, it said in a statement on Wednesday.

Covestro has shunned larger takeovers since it was spun off from Bayer BAYGn.DE in 2015, mainly because expanding its two main units – makers of transparent polycarbonate plastics as well as chemicals for insulation slabs and upholstery foams – would trigger antitrust pushback.

The smaller but more profitable CAS unit makes additives for coatings and adhesives, competing with DSM, Evonik EVKn.DE, Vencorex of France and Wanhua Chemical 600309.SS.

Covestro this month said it was not in talks to be taken over by Apollo Global Management APO.N, reacting to a Bloomberg report that the private equity firm was exploring a takeover.

The company has swiftly rebounded from a slump due to the coronavirus pandemic earlier this year, telling Reuters last month it was on track for forecast-beating earnings in the third quarter.

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