Evonik Cancels IPO, Again

For the third time since 2008, owners of the specialty chemicals maker Evonik Industries have canceled plans for an initial public offering of stock in the firm because of poor market conditions.

RAG Foundation, which owns 75% of Evonik, says many large investors it spoke with last week expressed a willingness to buy Evonik shares. However, uncertainty in capital markets and the economic crisis in Europe mean many of those investors are unwilling to pay an appropriate price for the shares, RAG says.

RAG and partner CVC Capital Partners, which owns the other 25% of Evonik, announced plans for the most recent offering in late May. According to reports from Germany at the time, the two expected to sell a 25% stake in Evonik and raise as much as $5.6 billion. RAG expected to use its proceeds to pay costs related to the shutdown of its coal mines.

What originally prompted RAG to again try to sell shares in Evonik was what it called a strong business outlook for the firm and robust capital markets in the first quarter of the year. Although market conditions have deteriorated since then, RAG says Evonik’s business continues to be strong; it will consider a sale again when investors are willing to pay what RAG considers a fair price.

Evonik, which consists largely of the old Degussa hydrogen peroxide, acrylics, and specialty chemical operations, had 2011 sales of $20.2 billion.

The first time RAG planned to sell Evonik shares was in 2008, but because of the financial crisis, it instead sold a 25% stake to CVC for $3.7 billion. RAG again planned a stock sale last year but nixed those plans in October because of market uncertainties.