Evonik (EVKN): Goldman Sachs sees strategic logic in a BASF-Evonik combination but maintains Neutral on Evonik

Overview

This event commentary examines the strategic rationale, portfolio overlap, valuation context and potential synergies of BASF's exploratory approach toward Evonik. Goldman Sachs considers the industrial logic credible but stresses that no terms have been disclosed, the outcome is open, and it remains Neutral on Evonik.

Core views

On 25 September, BASF confirmed exploratory talks with Evonik and its largest shareholder, RAG-Stiftung, regarding a possible takeover, while saying that both the process and outcome remained open. Evonik separately confirmed receipt of a non-binding approach for a voluntary public offer for all shares, but stated that talks were not then taking place. Goldman Sachs views both statements as confirmation of an approach, though the parties described the status differently; neither disclosed an offer price or other terms. The report sees strategic rationale in combining greater purchasing scale, a broader specialty-chemicals mix, and opportunities to consolidate procurement, administration and operations. Based on 2025 figures, the combined group would have approximately €74bn of annual sales, including about €30bn of Europe-wide sales, and would become the largest global chemical company. This is set against structural pressure on European production from elevated energy costs, Chinese export competition, regulation, weak demand and deindustrialisation. Goldman Sachs notes that 9% of European chemical capacity and 16% of European petrochemical capacity have shut since the 2022 energy crisis. Portfolio overlap is most significant in Care Chemicals and Additives within Evonik's Custom Solutions segment, which represented 39% of Evonik Group sales and 49% of EBITDA in FY25. In Care, BASF's €4.8bn Care Chemicals division and Evonik's Care activities would total around €6.6bn of FY25 sales, with overlap in personal-care and cleaning ingredients including surfactants, emulsifiers and cosmetic ingredients. In Additives, Evonik has leading positions in polyurethane and lubricant additives and a number-two position in coating additives, while BASF identifies Evonik as a competitor in Dispersions & Resins. There is also direct overlap in select amines and epoxy curing agents within Organics. By contrast, overlap in Inorganics appears limited, while Animal Nutrition is largely complementary: BASF's vitamins A and E, carotenoids, enzymes and organic acids would complement Evonik's methionine offering. The report cautions that overlap could require disposals, reducing potential portfolio and cost benefits. Chemical-M&A precedents provide context rather than a directly applicable bid valuation. Relevant performance-materials and intermediates transactions ranged from 6x to 14x EV/EBITDA, while specialty-chemicals and solutions transactions ranged from 7x to 15x; the respective averages were about 9.7x and 10.4x. Historical synergy targets averaged about 8% of acquired sales, combining cost and growth benefits. Applied mechanically to Evonik's €14.1bn of FY25 sales, this implies about €1.1bn of annual run-rate benefits, but Goldman Sachs emphasizes that attainable savings would depend on transaction scope and restructuring execution. The report also frames the deal against a difficult sector backdrop. European specialty-chemical producers face cyclical and structural headwinds, while recent trading has benefited from precautionary stocking and supply disruptions affecting Asian and Middle Eastern competitors. Goldman Sachs expects those temporary benefits to normalize through FY27. Evonik traded at 6.0x consensus next-twelve-month EV/EBITDA, in line with its approximately 6.0x historical average, while BASF traded at 8.5x versus a historical average near 7.8x. Neither stock was below its historical average multiple, and the report identifies sharper-than-expected unwinding of temporary earnings benefits as a valuation risk. Goldman Sachs reiterates Neutral on Evonik with a 12-month €20 target price. It values Evonik on 7.8x 2027E EV/DACF, derived by applying a 0.80 factor to the company's 9.8x historical EV/DACF multiple because CROCI is below historical levels. With Evonik at €19.37 as of the 25 September 2026 close, the reported upside is 3.3%.

Analysis framework

Goldman Sachs first compares the parties' takeover disclosures, then assesses industrial logic through sales scale and segment-level portfolio overlap. It benchmarks potential transaction valuation and synergies against chemical M&A precedents, evaluates sector conditions and trading multiples, and derives its target price using a discounted historical EV/DACF multiple reflecting below-historical CROCI.

Methodology notes

• Valuation methodsEV/EBITDA valuation

  EV/EBITDA transaction and trading-multiple comparisons

  The report compares Evonik and BASF trading multiples with historical averages and uses chemical transaction EV/EBITDA ranges as contextual benchmarks rather than a direct takeout valuation.

• Valuation methods

  EV/DACF valuation

  Goldman Sachs values Evonik at 7.8x 2027E EV/DACF, applying a 0.80 factor to its 9.8x historical EV/DACF multiple because CROCI is below historical levels.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Portfolio-overlap and synergy analysis

  The report maps overlaps and complementary product portfolios across Care, Additives, Organics, Inorganics and Animal Nutrition to assess potential disposals, cost savings and strategic fit.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Evonik (EVKn.DE)

  Primary subject and potential takeover target of BASF's non-binding approach.

  Strengths

  Potentially benefits from greater purchasing scale, a broader specialty-chemicals mix, complementary Animal Nutrition portfolios and possible procurement, administrative and operating synergies.

  Weaknesses

  Portfolio overlap in Care Chemicals, Additives and selected Organics could require disposals and reduce benefits.

  Comparison

  Trades at 6.0x consensus NTM EV/EBITDA, in line with its c.6.0x historical average; BASF trades at 8.5x versus c.7.8x historically.

  Risks

  Temporary sector benefits may normalize through FY27; methionine capacity additions could pressure Advanced Technologies pricing; asset-sale execution may disappoint.

• BASF

  Potential acquirer and competitor with Evonik in Care Chemicals and Dispersions & Resins.

  Strengths

  Could gain scale, a broader specialty-chemicals mix and complementary Animal Nutrition products.

  Weaknesses

  Significant product overlap could invite scrutiny and require disposals.

  Comparison

  Trades at 8.5x consensus NTM EV/EBITDA versus a c.7.8x historical average.

  Risks

  Transaction outcome, structure and synergy realization remain uncertain.

Key data

• Potential combined annual salesc.€74bnBased on 2025 figures; approximately €30bn would be Europe-wide sales.
• Evonik Custom Solutions share of group sales / EBITDA39% / 49%FY25; the segment contains the most acute overlap areas.
• Evonik FY25 sales€14.1bnUsed to illustrate potential synergies from precedent transactions.
• Illustrative annual run-rate synergiesc.€1.1bnMechanical application of average 8% precedent synergy targets to Evonik FY25 sales.
• Evonik NTM EV/EBITDA6.0xConsensus multiple, in line with its c.6.0x historical average.
• BASF NTM EV/EBITDA8.5xVersus a c.7.8x historical average.
• Evonik target price / price / upside€20.00 / €19.37 / 3.3%Price as of 25 September 2026 close; target is for 12 months.
• Evonik valuation multiple7.8x 2027E EV/DACFDerived from 0.80 times the 9.8x historical EV/DACF multiple.

Impact & implications

The report argues that a BASF-Evonik combination could improve scale and specialty-chemicals positioning while supporting consolidation in a pressured European chemicals market. However, regulatory scrutiny and possible disposals in overlapping businesses could limit benefits, and the current valuation framework and undisclosed deal terms support Goldman Sachs' Neutral stance.

Risks

• A stronger-than-expected 2H26/1H27 macroeconomic recovery could support broad-based demand, volumes and capacity utilization across Evonik's portfolio.
• Favorable methionine supply dynamics, including shutdowns, failed ramp-ups or capacity exits, could improve the outlook.
• Accelerated European consolidation or preliminary anti-dumping measures could reduce competitive export pressure from Asia.
• Restructuring and stronger earnings could improve cash generation beyond historical levels.
• Successful C4 (Oxeno) and/or Marl and Wesseling infrastructure asset sales could strengthen the balance sheet.
• Methionine capacity additions could pressure prices in Evonik's Advanced Technologies division.
• A weaker US industrial outlook could prolong weak demand in automotive, construction and industrial end-markets.
• Failure to complete the C4 (Oxeno) and/or Marl and Wesseling asset sales could weigh on the outlook under weak cycle conditions.