The potential BASF–Evonik combination has reached its first major hurdle. BASF reportedly made an initial proposal of around €22.15 per Evonik share, valuing Evonik’s equity at approximately €10.3 billion ($11.7 billion). Evonik rejected the proposal, considering the valuation too low to justify entering formal negotiations or allowing BASF to begin detailed due diligence.
For now, there are no active talks.
But the rejection does not necessarily close the door on a transaction. Instead, it shifts the discussion from strategic fit to valuation.
Why Did Evonik Reject the Offer?
The reported reason is straightforward: the price was not considered high enough.
BASF’s proposal represented a significant premium to Evonik’s share price before takeover speculation emerged. But a takeover premium alone does not determine whether an offer reflects the full value of a company.
There could be another consideration behind the valuation gap.
A BASF–Evonik combination could potentially generate significant synergies through procurement, production optimization, logistics, overlapping corporate functions and stronger utilization of selected assets.
If BASF expects to create substantial additional value after acquiring Evonik, Evonik shareholders may expect part of that future value to be reflected in the takeover price.
Evonik is also in the middle of its own transformation. The company is reducing costs, restructuring its organization and reshaping its portfolio around specialty chemicals. Accepting an offer today would mean shareholders giving up the potential future benefits of that restructuring.
These factors have not been officially cited by Evonik as reasons for rejecting the proposal, but they could influence how the company and its shareholders assess an acceptable valuation.
RAG-Stiftung Remains Critical
Another important factor is RAG-Stiftung, which owns approximately 44% of Evonik.
With such a large holding, its position could be crucial to any transaction. BASF has already approached the foundation regarding a potential takeover.
The decision therefore involves more than simply convincing Evonik’s management. Any revised proposal would also need to be attractive enough for Evonik’s largest shareholder to support further engagement.
What Happens Now?
The next move is largely with BASF.
One possibility is a higher offer. BASF could increase the €22.15-per-share proposal sufficiently to bring Evonik into formal discussions and gain access to due diligence.
A second possibility is that BASF maintains financial discipline and decides that paying substantially more would reduce the economic benefits of the acquisition.
There is also a middle path: BASF could improve the proposal while seeking enough engagement from Evonik to better understand the achievable synergies before committing to a much higher final valuation.
That creates an interesting dilemma.
The more BASF pays for Evonik, the greater the synergies it must eventually capture to justify the acquisition. But without Evonik opening its books, BASF cannot fully verify how large those synergies could actually be.
BASF has itself indicated that the potential synergies can only be properly validated with Evonik’s involvement.
The €22.15 proposal should therefore be viewed as an opening offer rather than the final chapter.
The real signal will be what happens next.
Does BASF raise its offer and demonstrate that Evonik is strategically important enough to justify paying more? Or does it maintain its valuation discipline and step away if the price required by Evonik becomes too high?
That decision could determine whether BASF–Evonik moves from an interesting consolidation idea into one of Europe’s most significant chemical transactions.
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