For companies in shrinking industries, the question is how to share gains from mergers. German chemicals group BASF, whose €10.3bn bid for rival Evonik was rebuffed despite a 29 per cent premium, should consider trying again. The deal, including debt, would have cost around €14bn. BASF’s shares fell 4 per cent on initial news.

Overlapping areas — where both companies make the same products or one supplies raw materials — represent about a third of BASF’s sales and two-thirds of Evonik’s, per Deutsche Bank analysts. Cutting costs equivalent to 7.5 per cent of Evonik’s sales would imply €1bn in annual savings for roughly €8bn of equity value, Lex calculates. The €2.3bn premium offered looks meagre.

Evonik, governed by the RAG-Stiftung foundation, may find a higher number hard to refuse, as analysts expect 2030 operating profit below this year’s forecast. Consolidation is a strategic imperative amid rising Chinese competition, with almost a tenth of production capacity scheduled to close, per Roland Berger.

If Evonik resists, BASF could target midsized rivals like Arkema, Syensqo or Lanxess. An ample supply of struggling rivals should motivate BASF to keep knocking on doors.