Sheenagh Matthews

BAYER was in the throes of preparing the separation of its $11 billion (R132bn) plastics unit, with how much debt to transfer to the new company and what it should be called being considered, the business’s chief financial officer Frank Lutz said yesterday.

“What I find fun is the variety of what you do as a businessman, as opposed to being a counter of peas,” the former investment banker at Goldman Sachs Group and Deutsche Bank said. “At the moment the entrepreneurial is at the forefront. We’re considering how to present ourselves best and on the equity story.”

The unit currently named Bayer MaterialScience is undergoing a complete rebranding as it looks to survive as a separate entity following Bayer’s decision to dispose of the company last year.

With annual sales of e11.7bn (R161bn), Lutz was working on which assets should be included on the new company’s balance sheet before a decision could be taken on liabilities, he said in an interview in Leverkusen, where health-care company Bayer is based.

Bayer MaterialScience, a maker of polycarbonates used in smartphones and automotive plastics, is preparing for an initial public offering or a spin-off by mid-2016 as its parent company focuses on health care and crop-science.

The business was on track to earn its cost of capital this year, Lutz said. Analysts have estimated Bayer MaterialScience is worth about e10bn, which would make it bigger than some firms on Germany’s benchmark DAX index.

Lutz said the plastics maker was studying potential valuations at the moment, although comparisons with a single firm in the chemicals industry were not helpful because there was not an equivalent publicly traded competitor.

Bayer shares traded 0.1 percent higher at e130 as of 11.16am in Frankfurt, valuing the firm at e107bn. – Bloomberg