BASF is trying to revive takeover talks with German chemicals rival Evonik by offering unusually long job protections, after Evonik rejected a reported €10.3 billion approach as too low. The move highlights the pressure on Europe's chemical industry, which is grappling with weak demand and high energy costs.
What BASF is offering
BASF CEO Markus Kamieth said that, if a deal goes through, Evonik's current job-preservation agreements would be honored. That means no compulsory redundancies until 2032, and collective bargaining agreements would remain in place. He also sought to ease concerns about where the combined company would be run, saying a future executive board member would sit in Evonik's current headquarters city, Essen.
These are significant concessions. In large mergers, job guarantees are often limited to a few years, and headquarters decisions can be a major sticking point. By extending protections to 2032 and committing to an Essen presence, BASF is signaling it wants to remove the biggest obstacles to a deal.
Why Evonik said no
Evonik reportedly turned down the €10.3 billion offer because it considered the price too low. The company, which makes specialty chemicals used in everything from pharmaceuticals to animal feed, has been seen as a potential takeover target as it works to streamline its portfolio. But its management clearly believes the business is worth more than BASF's initial bid.
The rejection is not unusual. In many takeover attempts, the first offer is just a starting point. What matters now is whether BASF comes back with a higher price and whether the job guarantees are enough to bring Evonik's board and its powerful labor unions to the table.
Industry headwinds
The backdrop is tough. Europe's chemical sector has been hit by soaring energy costs, especially natural gas, which is a key raw material. Demand from major customers like carmakers and construction firms has also weakened. Many companies have been cutting costs and restructuring to protect margins.
BASF itself has announced cost-saving programs, and a deal with Evonik would create a giant with more scale to compete globally. But bigger isn't always better, and integrating two large chemical companies is complex. Investors will be watching whether BASF overpays or takes on too much risk.
What it means for investors
For everyday investors, this is a story about corporate strategy and deal-making. If a takeover happens, Evonik shareholders could see a premium to the current share price, but BASF shareholders might worry about the cost and integration challenges. The job guarantees, while good for employees, could also limit BASF's flexibility to cut costs after a deal.
There's also a broader signal. The fact that BASF is willing to offer such long job protections shows how sensitive the political and social environment is in Germany, where labor unions have significant influence. Any large deal will face scrutiny from workers, politicians, and regulators.
For now, the ball is in Evonik's court. It can accept a higher offer, negotiate further, or hold out. Investors should watch for any news of a revised bid and how the companies address the valuation gap. As with any merger, the devil is in the details—and in this case, the details include both the price and the promises made to keep jobs in Essen.
Related reading: BASF's job and site guarantees and BASF weighing a higher bid.
