Evonik plans reorganisation amidst BASF takeover approach

Evonik has revealed plans to reorganise its business portfolio, allotting roles, and specific tasks to the major sites in Germany and implementing targeted growth projects. This came in the wake of announcing plans to close two of its smaller sites and poor market conditions and ahead of BASF and Evonik confirming exploratory about a possible acquisition.

“We are in a structural and economic crisis in our industry,” said Claus Rettig, was named interim CEO of Evonik in August after Christian Kullmann was taken ill. “We will use this polycrisis to change old structures and position ourselves better.”

As part of its Evonik Tailor Made restructuring programme, whose second phase of implementation will run from 2027 to 2029, the company is planning to cut 3,200 jobs, about two thirds of them in Germany. It will use the improved cost position to “concentrate growth on our strengths, on the right future topics and on the most lucrative markets”, Rettig said.

Individual business units will be aligned according to their roles and managed accordingly: as growth drivers or cash generators. An example of the former is the Designed Polymer Solutions business line, which is currently being set up. It bundles growth areas from the aerospace, automotive and gas separation markets, including biogas and hydrogen.

Evonik also sees good opportunities for growth particularly in Asia and the US. It is currently looking at further investments there and will aim to capitalise on growth opportunities “more quickly and consistently from the existing European production network”, while still pursuing the goal of a balanced distribution of revenue in all three regions.

In Germany, the company will define “a clear profile” for the six major production sites, which will “serve as guidelines for their future development”. This includes the divestment of Oxeno, its C4 chemicals business, and Syneqt, an infrastructure manager. 

The two German plants Evonik has announced plans to close comprise at Hamburg, employing about 50 and making cosmetics and personal care ingredients, will close by mid-2027; another at Bitterfeld, employing around 40 and producing chlorosilanes, will close in April 2027.

“Our structures when it comes to production, administration and laboratories are too fragmented in some areas,” Rettig said at the time. “This leads to unnecessarily high costs and weakens our competitiveness.”

The Hamburg site’s activities will be bundled together with the technological know-how at Essen-Goldschmidtstrasse, which is already a major site of the Care Solutions business line. Care Solutions is suffering from weak global demand and persistent pressure on profit margins in international competition, the company said.

Bitterfeld had suffered from low plant utilisation and “persistently challenging market conditions for high-purity silicon tetrachloride, including increasing supply from Asia and competitive pressure”. Evonik looked at other options including reducing capacity, mothballing and a sale but decided that none “promised a sustainable economic perspective in the long term”.

However, the company has continued to invest in growth markets. Most recently it has announced that it will spend over €93 million on a GMP drug product facility for lipid-based drug delivery in Vancouver, with up to €42 million in support from the Canadian federal government’s Strategic Response Fund. It is also continuing with an €80 million investment to add fermentation capacity for APIs at the Fermas site in Slovenská Ľupča, Slovakia.

On 25 September, BASF confirmed in response to media reports that it was in exploratory talks with Evonik and its largest shareholder RAG-Stiftung about a potential takeover. Evonik said that it had received a non-binding approach from BASF but that “currently there are no talks taking place” and it would not comment any further on it beyond its legal obligations.