Covestro Will Focus on Composites at Fakuma

Covestro will make its public debut at the Fakuma trade fair in Friedrichshafen, Germany, from October 13 to 17, and current strong stock market conditions for plastics point to an initial public offering soon after the company’s spin-off from Bayer Sept. 1rsz_covestro_logo_png

Bayer has been edging its plastic business out the door for several years, starting with the creation of Lanxess as a separate company and Bayer MaterialScience (BMS) as a standalone division in 2004. BMS includes the polycarbonate and polyurethane businesses, which Bayer scientists played key roles in discovering, going back to Otto Bayer’s work in 1937.

It’s certainly not a new trend. GE sold its iconic plastics business to SABIC in 2007; Dow divested several plastics businesses including polycarbonate in the past 10 years, and Monsanto exited nylon a long time ago to focus on agricultural chemicals. Investors like the growth prospects for pharmaceuticals and ag chemicals more than they like what goes on in the highly cyclical plastics business.

Officials at Covestro (still functioning as BMS) are excited about the change and are planning a major marketing blast starting Sept. 1 to make sure the world knows about the new name.

Otto Bayer

Otto Bayer

Bayer has enlisted a who’s who of financial institutions led by Rothschild to advise on the IPO and another group of leading global banks to move the stock. The goal is to raise close to $11 billion that Bayer can plow back into drug and ag businesses.

The timing seems exquisite.

Dow’s stock was trading today at around $49 up from $22 Sept. 30, 2011 (a low point) after it reported its 11 consecutive quarter of rising operating margins. Milacron, which emerged from bankruptcy, had improved its fortunes adequately to allow a debt-reducing stock offering last month.

One of the interesting discussion points for Covestro at Fakuma will be composite systems based on both polycarbonate and polyurethane.

“The new materials are particularly thin and lightweight, and the solutions produced so far offer properties superior to those of existing solutions based on aluminum, for example,” says Olaf Zöllner, technical manager of the composite business. “Furthermore, they are robust, freely formable, easy to process and can be recycled multiple times.”

Bayer MaterialScience recently strengthened its position with the acquisition of Thermoplast Composite GmbH (TCG) in Langenfeld, Germany.

About Doug Smock

Former Chief Editor at Plastics World and Senior Technical Editor Design News

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