Lanxess marks bourse debut with job cuts
31 January 2005
FRANKFURT – Lanxess, the spin-off company that has taken over Bayer’s chemical factories and a third its plastics business, forecast more job cuts as trading in Lanxess shares began on Monday in Frankfurt.
The market priced Lanxess stock at EUR 15.75 at opening, but it fell sharply to EUR 14 by early afternoon. Analysts warned that the stock might keep falling as investors who were allocated shares in the split dumped them and stocked up with Bayer again.
One Lanxess share was issued for every 10 Bayer shares held. Comparing the resulting 11 shares to the 10 previous ones, Monday’s prices meant the overall investment grew 2.5 percent in value.
Lanxess chief executive Axel Heitmann said cost cutting has absolute priority at the new company, Germany’s third-largest chemicals manufacturer after BASF and Degussa. “Right now all business processes are subject to review,” he added.
He said the opening price of the stock was not so significant, since there were “technical reasons” for the share price to fall over the next few weeks or months. As an example, he said many investors would drop it from portfolios devoted exclusively to DAX stocks.
For Monday only, Lanxess was listed in the DAX. The move was decided so that the market could set an overall value on the Bayer parts.
Lanxess will no longer be in the 30-share line-up on Tuesday, but may ultimately gain recognition as an MDAX stock. The next review of the selection for the MDAX mid-capitalization companies takes place in June.
The name Lanxess is made up, and is based on the French word lancer (to launch) and the English word success. Bayer’s rump business will be more focussed on pharmaceuticals.
Subject: German news