Leverkusen - Bayer, the German chemicals and pharmaceuticals giant, said Friday it plans to spin off its industrial chemicals subsidiary Lanxess by awarding free shares in the unit to Bayer's existing shareholders.
Shareholders would then be able to trade their new Lanxess shares on the stock exchange from the beginning of next year, Bayer said in a statement.
Bayer, maker of the Aspirin painkiller, announced last November that it wanted to pull out of large chunks of its chemicals and plastics businesses and focus instead on higher-margin healthcare and agrochemicals activities.
The aim was to float the chemicals and plastics activities, pooled into a new company called Lanxess, on the stock exchange by 2005.
However, in view of the difficult situation on the stock markets, Bayer decided to keep its options open as to how to proceed, either by initial public offering (IPO), in which shares are sold to the general public, or by a spin-off.
In a statement released Friday, Bayer said it had how chosen the latter option as "the best route to a listing for Lanxess."
"That way the present owners of Bayer's assets automatically remain the owners of the assets being transferred to Lanxess," said chairman Werner Wenning.
"We wanted to clarify the situation now, at the same time ensuring that the transaction will be fully accomplished," Wenning said.
"Lanxess' management can now continue to focus on building the business."
The precise modalities, such as the number of Lanxess shares awarded to each Bayer shareholder and the date from which the new shares can be traded on the stock exchange, would be made at an extraordinary shareholders' meeting in mid-November, the statement said. - AFP