Evonik has turned down a €10.3 billion offer from its larger German rival BASF, setting the stage for a potential takeover contest in Europe’s chemicals sector amid ongoing efforts to consolidate the industry. BASF, headquartered in Ludwigshafen, proposed an initial bid of approximately €22.15 per share, which represented nearly a 29 percent premium over Evonik’s share price prior to takeover rumors surfacing.

Sources familiar with the matter indicated that Evonik deemed the offer insufficient to begin formal negotiations or to permit BASF to conduct due diligence. The bid implied an enterprise value of about €14.2 billion for Evonik, according to market data.

Last week, BASF disclosed it had engaged in exploratory discussions with Evonik and the RAG-Stiftung foundation, which holds a 44 percent stake in Evonik. The foundation, established in 2007 by the German government, states, and trade unions to manage the transition away from hard coal mining, will play a pivotal role in determining the outcome of any potential deal.

Evonik, led on an interim basis by Claus Rettig following the health-related departure of former CEO Christian Kullmann in August, confirmed receipt of the "nonbinding" approach but stated that no active talks were underway. Shares in Evonik rose 2.4 percent to €19.71 following the announcement, while BASF shares declined by 3.6 percent amid investor concerns over the costly and complicated nature of the proposed merger.

BASF emphasized that any combination would be carefully considered, noting that acquisitions must be disciplined and that potential synergies could only be verified through engagement with Evonik. The company also highlighted that the path and result of discussions remain uncertain.

The proposed acquisition forms part of BASF CEO Markus Kamieth’s strategy to strengthen Europe’s fragmented chemicals industry, aiming to create a larger player better equipped to compete with major Chinese and U.S. companies such as Sinopec and Dow. With a market capitalization around €44 billion, BASF’s combination with Evonik, which employs approximately 31,000 people, would create a group generating combined revenues near €74 billion.

Both companies have been implementing restructuring programs to address global challenges including high operational costs, excess capacity, and weakening demand. BASF has focused on divesting non-core assets and reducing expenses, while Evonik has been closing plants, cutting jobs, and selling off peripheral businesses.

The potential merger faces scrutiny from shareholders, management, and political stakeholders, who must balance the benefits of forming a domestic chemical industry champion against the risks of integration difficulties and the likelihood of job reductions. Neither Evonik nor RAG-Stiftung provided further comment on the developments.