Bayer plans to list its plastics unit on the stock market

German drugmaker Bayer intends to float its plastics business in what would be one of the biggest European initial public offerings in years, even as the company accelerates efforts to focus exclusively on life sciences.

With sales last year of €11.2 billion, Bayer’s material science division is one of the world’s largest makers of high-tech polymers – durable but lightweight materials with a wide array of uses such as making cars lighter.

Bayer, founded in 1863 as a manufacturer of synthetic dyes, is making a decisive shift away from its roots as a drugs and chemicals conglomerate to concentrate on life sciences, where profit margins are higher than in plastics.

The material science division has an estimated equity value of at least €8 billion, according to one person close to Bayer. This could make its market debut the biggest European float since the €6.1 billion IPO of chipmaker Infineon Technologies in 2000.

Bayer’s shares rose almost 5 per cent and were at €111.6 at mid-afternoon Thursday. The company’s management board approved the material science float plan on September 2nd, and its supervisory board agreed yesterday.

The float will take place by 2016 at the latest, the company said.

Chief executive Marijn Dekkers said the group wanted to create "two top global corporations", with Bayer as a world-class life sciences business and material science as a leading player in polymers.

The company’s preference is for an IPO, but it is also looking at a spin-off in which shares in the new business would be distributed to Bayer investors. The latter option would not bring in cash, but some debt would be transferred to the new company.

Bayer said the spin-off would enable the material science division to raise capital directly for future development. – Copyright The Financial Times Ltd 2014