Bayer could get €17bn for BMS - Citigroup

18 May 2007 14:29  [Source: ICIS news]

TORONTO (ICIS news)--Bayer could get up to €17bn ($23bn) for its Bayer MaterialScience (BMS) plastics business should it decide to sell, Citigroup said on Friday.

 

Taking the $11bn price General Electric reportedly received for GE Plastics from Saudi Arabia’s SABIC as comparison, Citigroup values BMS at between €13.4bn and €17.0bn.

 

The price for GE Plastics, at roughly 1.7 times sales, was good, considering that polycarbonate (PC) - which makes up the bulk of GE Plastics' sales - was suffering from overcapacity, according to Citigroup’s analysis.

  

PC accounts for about one third of BMS’ business. The bulk of BMS’ business is in polyurethane (PU), where profitability was expected to remain robust, Citigroup said.

 

The bidding for GE Plastics suggested there was broad interest in such plastics assets, it added.

 

While Bayer currently insisted that BMS was a core business, the analysts said they expect Bayer to monetise BMS over the mid-term to focus on its healthcare business.

 

Bayer already sold some industrial assets to help finance the acquisition of German pharmaceuticals firm Schering AG last year, Citigroup said.

 

Citigroup has a target price of €60/share for Bayer’s stock.

 

Bayer’s share price was up by over 3% at €51.03 on the German Xetra exchange on Friday afternoon.

 

($1= €0.74)

By: Stefan Baumgarten
+1 713 525 2653

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