DEGUSSA TO CHANGE HANDS
Energy deal affects ownership
Degussa, currently 65% owned by energy group E.ON, will see its ownership change as a result of a swap planned between E.ON and German mining and engineering company RAG.
Degussa, with 2001 sales of $11.6 billion, has been shaped by the amalgamation of chemical operations from various parents' mergers and restructurings undertaken over the past several years. As a result of the new deal, Degussa may grow even bigger if RAG decides to contribute its $2.5 billion-per-year chemicals and plastics business, Rütgers AG, to the company.
The deal calls for E.ON to exchange some of its Degussa shares for RAG's 18% stake in Ruhrgas, Europe's largest natural gas importer. E.ON, which already has a 40% stake in Ruhrgas, would thus gain majority control of the firm.
In what is to be a two-stage process, RAG is to pay 38 euros--approximately $34.35--per share for enough Degussa shares so that it and E.ON hold equal stakes. Then, by May 2004, RAG will buy more shares from E.ON until it gains a 50.1% holding. In all, it will spend about $3.6 billion. E.ON will probably sell its remaining shares on the stock market, where 35% of Degussa is already traded.
The deal isn't a sure thing, however. E.ON already made one attempt to gain control of Ruhrgas that was blocked by the German cartel office, and monopoly officials voiced their opposition to the new attempt last week. Germany's economic ministry is expected to rule on the matter by July.
According to Degussa, RAG has confirmed that it "will support Degussa's successful growth strategy and its business development." RAG has also indicated it will support Degussa as an independent, publicly listed company. With those pledges, Degussa's management board, led by Chairman Utz-Hellmuth Felcht, "welcomes these plans."