BASF has made a nonbinding takeover approach to German chemicals rival Evonik, aiming to expand its geographic and product mix while consolidating the under-pressure industry. Ludwigshafen-based BASF recently proposed a merger to Evonik and its largest shareholder, the RAG-Stiftung foundation, which holds a 44 per cent stake. Essen-based Evonik, valued at €8.4bn in market capitalisation, would likely demand a significant premium, with an enterprise value of about €12bn.

BASF, worth €47bn, has been consulting banks on a potential deal since earlier this year. While discussions have occurred, no agreement is guaranteed. Evonik confirmed receiving the approach but stated no talks are currently underway.

Shareholders and executives must be convinced of the strategic fit and premium value. The RAG-Stiftung’s position is pivotal. Evonik shares rose 10.6 per cent on Friday, while BASF fell nearly 3 per cent.

The deal would create a Germany-based champion to compete with Chinese and American rivals like Sinopec and Dow, combining €74bn in revenues. Regulatory scrutiny is expected, though Brussels supports larger European champions. Overlaps in Germany offer cost-cutting potential, with growth opportunities in Asia and the US.

Evonik, operating in over 100 countries with 31,000 employees, produces specialty additives, polymers, and amino acids. It recently announced plans to shed 3,200 jobs, mostly in Germany. Interim CEO Claus Rettig, who took over from Christian Kullmann in August, is closing smaller plants and selling non-core assets.

BASF, led by CEO Markus Kamieth, has been selling peripheral assets, including a €7.7bn stake in its automotive coatings business to Carlyle, and plans to list its agricultural solutions business in mid-2027. Both companies declined to comment.