nvesting.com -- Evonik Industries shares rose 2.6% following a Reuters report that BASF could submit a new takeover offer for the German specialty chemicals company.
Reuters reported that BASF may make another bid after Evonik rejected an earlier offer of €22.15 per share in September. That initial proposal represented a premium of nearly 25% to Evonik's prior three-month average share price.
Citi analysts commented that even at an assumed offer price of €25 per share, their model indicates average earnings per share and free cash flow accretion of approximately 20% through 2030 for BASF.
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However, the analysts noted that return on invested capital would fall to around 9%, which they view as a threshold given the scale, complexity and execution risks involved.
The analysts added that unless major shareholder RAG opposes a transaction, Evonik management may ultimately decide to engage in discussions.
Citi also noted that RAG's most recent share placement was executed at €19.99 per share.
The analysts said they currently struggle to identify a valuation scenario in which Evonik shares can sustainably exceed €22 per share absent a broader sector recovery.
Original Article
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