The Urethane Blog

Apollo Looking at Covestro

Apollo Said to Weigh Deal for $10 Billion Plastics Firm Covestro

Ed Hammond, Eyk Henning and Dinesh Nair, Bloomberg News

  • (Bloomberg) — Apollo Global Management Inc., the buyout firm led by billionaire Leon Black, is exploring a takeover of German plastics maker Covestro AG, according to people with knowledge of the matter.

The New York-based investment firm contacted Covestro in recent weeks, said the people, who asked not to be identified as the information is private.

Covestro was spun out of the drugmaker Bayer AG in an initial public offering in October 2015. While the company’s shares have risen 68% since then, they have more than halved in price from a high in early 2018, giving it a market value of 8.2 billion euros ($9.7 billion).

Deliberations are at an early stage, and there’s no certainty they will result in a transaction, the people said. A representative for Apollo couldn’t immediately comment. A representative for Covestro declined to comment.

Apollo has broad experience in the plastics industry. Its prior investment in plastics-maker LyondellBasell Industries NV is still held up as a textbook model for a start-to-finish private equity transaction. Last year, it unsuccessfully targeted plastic-packaging maker RPC Group Plc.

Buying Covestro would mean the private equity firm once again enters highly-competitive markets like polycarbonates, used widely in the building and automotive industries. Leverkusen-based Covestro also manufacturers the more technically-challenging methylene diphenyl diisocyanate, or MDI, used to make polyurethanes for insulation. Its competitors include Huntsman Corp.