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Bayer May Spin Off Plastics Later This Year

Report: Bayer may spin off Covestro as early as October

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Bayer AG Patrick Thomas, CEO of Bayer MaterialScience, introduces the unit's new name Covestro.

German chemical giant Bayer AG may plan to list its plastics division as early as October to take advantage of current rich stock market valuations, according to a Reuters report that cites sources familiar with the deal.

The plastics unit Bayer MaterialScience (BMS), which will be renamed Covestro and turned into a legally separate unit in September, has the estimated value of more than 10 billion euros, according to Reuters.

One source quoted in the report said that the company wanted everything ready to float the unit as soon as possible after Sept. 1, if market conditions are right.

As part of the process the news agency reports that Bayer has also asked more banks to come forward for a role in the organization of listing alongside IPO adviser Rothschild, and the global coordinators Morgan Stanley and Deutsche Bank.

Leverkusen, Germany-based Bayer has said that Covestro will become a separately listed company by mid-2016 at the latest. The company has stated that in the second half of 2015 it will make the decision on whether it will 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.