Lanxess, the chemicals and polymers spin-out of Germany's Bayer, made its debut on the Frankfurt stock exchange this morning.
Lanxess comprises most of Bayer's chemicals activities and about one third of its polymers business, and its spin-out has left Bayer free to concentrate on what it has described as 'primarily innovation- and technology-driven core businesses', namely healthcare, nutrition and high-tech materials.
On Friday, Bayer's stockholders received one share in Lanxess for every 10 Bayer shares they owned. Lanxess started trading at €15.75, a little high than the €11-€15 range predicted by Deutsche Boerse, which operates the Frankfurt exchange. However, the opening price was right in the middle of analysts' estimates.
Lanxess stock fell around 11 per cent in mid-morning trading today, while Bayer was down just over 3 per cent to €24.18.
Speaking at a conference to mark the stock's listing, Lanxess chairman Axel Heitmann said the company has achieved its independence just at a time when the chemical sector as a whole looks set to stage a recovery.
Despite the high oil price and weak US dollar which held back the sector in 2004, sales showed a favourable trend and the German Chemical Industry Association (VCI) is expecting production to rise 2 to 2.5 per cent this year, higher than the 1.5 to 2 per cent increase last year, he said.
Increased demand will allow price and margin increases, predicted Heitmann, a process that he said has already started to take place across a number of Lanxess business units.
Heitmann also said some 'unpopular' measures would be undertaken to improve the financial position of the firm, including a programme of reviewing above-payscale salaries that should carve €20m off the payroll. Lanxess is also restructuring its activities, for example shifting some production from the US to China, to save money. Cost reduction remains a top priority at Lanxess," he stressed.
Lanxess has about 20,000 employees, half of whom work in Germany. Bayer has said the spinoff will leave it with about 93,500 employees worldwide.