Covestro cut the price range for the initial public offering to between €21.50 and €24.50, down from €26.50-€35.50 previously, the company said in a statement yesterday.

Reuters/Frankfurt

Bayer’s Covestro business cut the size of its planned share sale to €1.5bn ($1.7bn) from €2.5bn, blaming deteriorating capital markets and the impact of the Volkswagen emissions scandal.
The car industry is a major customer for plastics maker Covestro and has been thrown into turmoil by the crisis engulfing Volkswagen. Concerns over a slowdown in China have also reduced appetite for the shares.
Covestro cut the price range for the initial public offering (IPO) to between €21.50 and €24.50, down from €26.50-€35.50 previously, it said in a statement yesterday.
Covestro had earmarked the proceeds from new shares in the IPO to clear debt it took on from parent Bayer. To make up for the shortfall, Bayer will give Covestro an additional €1bn in equity capital.
Covestro’s initial aim of raising about €2.5bn would have made it the largest stock market debut in Germany in almost 15 years.  Determined not to delay the flotation, drugmaker Bayer agreed to keep a bigger stake in the subsidiary than previously planned, people familiar with the transaction said.
Under the new terms, Bayer will hold 66.7-69.6% in the subsidiary, which it wants spin off completely in the medium term. That is up from 60-66% previously targeted.
The number of new shares to be issued will depend on the issue price in order to meet the targeted gross proceeds.
The first day of trading was postponed to October 6 from October 2 to allow for Germany’s financial regulator to review the changed terms.
Having struggled to fill its order book over the two-week subscription period, Covestro yesterday reached that goal under the new terms, a person familiar with the matter said.
Bayer declined to comment.
Covestro’s products include coating ingredients, transparent plastics for headlights and sunroofs in cars and chemicals for foams used in vehicle seats.  European shares turned in their poorest quarterly performance since the worst of the eurozone debt crisis in 2011. Stocks have steadily lost ground on signs of a slowdown in China, the world’s second-biggest economy.
US chemicals peer Huntsman, which according to sources was initially suggested by Covestro as a possible benchmark to judge its value, last week warned that third-quarter results would be hurt by soft demand in Asia Pacific, prompting a plunge in its share price.
Covestro’s bumpy ride to the stock market contrasts with Scout24, Germany’s biggest digital classifieds group, which on Thursday had its first day of trading in an 1.16bn euro IPO at unchanged terms.