Covestro offers shares for between EUR 26.50 and EUR 35.50

Not for distribution, directly or indirectly, in or into the United States, Australia, Canada or Japan

  • Subscription expected to run from September 21 until October 1, 2015
  • Gross proceeds of about EUR 2.5 billion anticipated
  • Capital increase through the issue of new shares
  • First listing on the Frankfurt Stock Exchange planned for October 2

Covestro AG, a world-leading polymers producer, is planning its stock market flotation at the beginning of October 2015. By way of a capital increase, the company will offer between 70.4 million and 94.3 million new shares at an issue price of between EUR 26.50 and EUR 35.50. Covestro is targeting gross proceeds of about EUR 2.5 billion. The number of shares to be issued in the Initial Public Offering (IPO) will depend on the issue price. The subscription period for the shares will run from September 21 until probably October 1, 2015. The issue price will be set on the basis of a bookbuilding process and the first listing in the regulated market segment (Prime Standard) of the Frankfurt Stock Exchange is planned for October 2.

The new bearer shares (ISIN DE0006062144, ticker symbol 1COV) will be offered publicly in Germany and Luxembourg to private and institutional investors. Private placements are planned in other countries. The details of the offering have been defined by Covestro (formerly Bayer MaterialScience) and Bayer AG as a shareholder together with Deutsche Bank and Morgan Stanley, the two joint global coordinators for the transaction.

"We have prepared intensively for our independence and think our company is ready for listing. After the IPO, we will be able to deploy our strengths more rapidly, effectively and flexibly and continue building on our competitive advantages," explained Covestro CEO Patrick Thomas.

In the bookbuilding process, 70.4 million shares are to be offered at the top end of the price range. In the mid-range, the offering will comprise 80.6 million shares, while 94.3 million shares will be available at the lower end of the price range.

Retail investors can submit offers until the anticipated close of the subscription period at 12:00 midday Central European Summer Time (CEST) on October 1. Institutional investors have until 2:00 p.m. CEST on the same day.

On conclusion of the transaction and assuming the placement of all the shares offered at the respective prices, the free float would be about 34 percent at the top end of the price range, approximately 37 percent at mid-range and around 40 percent at the lower end of the range. Stabilization measures equivalent to as much as 10 percent of the emission volume are possible. Covestro will use the proceeds from the IPO primarily to repay its debt to Bayer and thus establish its target capital structure. Immediately after the capital increase, net debt together with pension liabilities should be around EUR 4 billion. With target net debt together with pension liabilities at 2.5 to 3 times adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for fiscal 2015, Covestro is seeking an investment-grade credit rating.

Sustainable dividend policy envisaged

Covestro intends to share its commercial success with its stockholders by way of dividend payments. For the shortened fiscal year 2015, a dividend payment of around EUR 100 million to EUR 150 million is envisaged. From fiscal 2016 onward, the company is planning dividend payments of between 30 and 50 percent based on net income (IFRS). "Our strong free cash flow is expected to support a sustainable dividend policy," emphasized CEO Thomas.

"In the mid-term, we are forecasting further growth in sales and adjusted EBITDA," went on Thomas. "As the developer and manufacturer of components for high-tech plastics, coatings, adhesives and sealants, we have a global footprint. For decades, we have been supplying many thousands of customers in the automotive, construction and electronics industries and in other key segments."

Detailed information about the offering is contained in Covestro's stock market prospectus, which was today approved by the German Financial Supervisory Authority (BaFin). The document will be made available on the Covestro website at www.covestro.com on the evening of September 18.


Forward-looking statements

This news release may contain forward-looking statements based on current assumptions and forecasts made by Covestro AG. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in Covestro's and Bayer's public reports, which are available on the Covestro website at www.covestro.com and on the Bayer website at www.bayer.com. Covestro and Bayer assume no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.

Important information

This information is not intended for distribution, directly or indirectly, in or into the United States (including its territories and possessions, any state of the United States and the District of Columbia), Australia, Canada or Japan. This information does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The shares mentioned herein have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act").

The shares may not be offered or sold in the United States, except pursuant to an exemption from the registration requirements of the Securities Act. There will be no public offer of the shares in the United States.

In the United Kingdom, this information is only being distributed to and is only directed at (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (ii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). The shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Shares will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

This publication constitutes neither an offer to sell nor a solicitation to buy securities. The offer will be made solely by means of, and on the basis of, the published stock market prospectus. An investment decision regarding the publicly offered securities of Covestro AG should only be made on the basis of the stock market prospectus. The stock market prospectus was published promptly upon approval by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and is available free of charge from Covestro AG, 51365 Leverkusen, Germany, or on the Covestro website at www.covestro.com.