Evonik Industries

Evonik Industries AG

Type	Aktiengesellschaft
Traded as	FWB: EVKA
Industry	Speciality chemicals
Founded	2007
Headquarters	Essen, Germany
Key people	Klaus Engel (Chairman), Wilhelm Bonse-Geuking (Chairman of the supervisory board)
Products	Chemicals
Employees	34,000 (2010)[1]
Website	www.evonik.com

Evonik Industries is an industrial corporation in Germany owned by RAG Foundation and one of the world´s leading specialty chemicals companies. It was created on 12 September 2007 as a result of restructuring of the mining and technology group RAG. Evonik Industries united the business areas of chemicals, energy and real estate of RAG, while mining operations continue to be carried out by RAG. Since then, the energy and real estate business areas have been divested, with a minority share in the former and a majority share in the latter still being held. Its chemicals business already generates more than 80% of sales in areas in which it ranks among the market leaders. Evonik Industries employs about 34,000 people and carries out activities in more than 100 countries. The operating activities are organized into six business units which are a part of the chemicals business area. Evonik is the main sponsor of Borussia Dortmund.

History

Founding of the company

Historically Evonik Industries' businesses were part of RAG activities. The idea of splitting the company was put forward in 2005. The background of this idea was that RAG's core business of coal mining is carried out under government contract in Germany, while businesses transferred to Evonik compete on international markets. This structure did not permit the payment of dividends to the shareholders, which limited shareholders' readiness to inject equity into the RAG, which restricted the company's ability to access fresh capital. As the first step, RAG’s shareholders sold their shares to RAG foundation (RAG-Stiftung) to split RAG. The Foundation was established on 10 July 2007 and Evonik Industries was created on 12 September 2007.

The original plan foresaw IPO of Evonik Industries in the first half of 2008. However, this plan was postponed until mid-2010 at the earliest and the RAG Foundation started to look for strategic investors, while still holding on to the plans for midterm IPO.^[2][3] In June 2008, the private equity firm CVC Capital Partners bought a stake of 25.01% in the company.^[4] Among many other private equity investors who bid for the stake (amongst them Blackstone Group and 3i), Russian Gazprom was reported to have considered buying a stake in Evonik Industries.^[5] The IPO, by now planned for fall of 2011, was once again postponed in September 2011, this time citing the "current state of financial and capital markets and their prospects." ^[6]

Ownership structure since 2008

Finally, since 2008 the ownership structure of the Evonik Industries AG is composed as follows^[7]:

• 74,99% is held by the RAG Foundation
• 25,01% is held by Gabriel Acquisitions GmbH (a company owned by funds advised by CVC Capital Partners)

Historical significance

In 2006 RAG acquired Degussa AG, which was later renamed Evonik-Degussa GmbH. In 1998, Degussa instructed the American historian Peter Hayes to clarify the company history during the Third Reich.^[8] One of the former subsidiaries of Degussa, the Degesch (translation: German Corporation for Pest control), was the main manufacturer and distributor of the chemical Zyklon B, which was used to execute people in gas chambers of German death camps during the Holocaust.^[9] Degussa had also processed gold dental fillings removed from the mouths of death-camp inmates.^[10]

The historical significance of Degussa appeared again in the publicity during their involvement in the building of the Holocaust Memorial in Berlin, because the plasticizer and the anti-graffiti coating were produced by Degussa. Therefore, the work on the memorial was interrupted to clarify the situation. In November 2003, the trustees decided to finish the building with the involvement of Degussa.^[11]

Operations

After concentrating operations to the holding's core the former business areas Energy and Real Estate are now mere financial investments, leaving the chemical business area of Evonik as the only one operated by Evonik Industries.^[12]

Chemicals Business Area

Degussa factory in Hopewell, Virginia

Degussa gold, 5 g

The Chemicals Business Area of Evonik emerged from Evonik Degussa GmbH (formerly Degussa GmbH — an acronym of Deutsche Gold- und Silber-Scheide-Anstalt (German Gold and Silver Metals Separating Works)) based in Essen, Germany. It employs about 34,000^[1] people and is one of the world's largest producers of specialty chemicals. It includes six business units: Advanced Intermediates, Consumer Specialities, Coatings & Additives, Inorganic Materials, Health & Nutrition and Performance Polymers.^[13] Degussa was acquired by RAG in 2006. Latest acquisition: Tippecanoe Labs plant site at Lafayette Indiana from Eli Lilly 1 January 2010

Energy Business Area

Evonik Industries operated Bergkamen Power Station

The energy business portion of Evonik is operated through Evonik Steag GmbH (formerly STEAG), which is the fifth largest power company in Germany, based in Essen. The company operates eleven hard coal-fired power plants, of which nine are located in Germany, and one in Turkey, Colombia and Philippines, and two industrial power plants. It operates also in the field of transport, processing and distribution of hard coal, coke and byproducts from coal processing, as also in the field of gas supply, transport and trading. In December 2010 Evonik Industries signed an agreement to sell 51% of shares in its energy business to a consortium of municipal utilities in Germany´s Rhine-Ruhr region. The agreement was finalized on March 2, 2011. Evonik will be selling its remaining stake to this majority partner within five years.^[14]

Real Estate Business Area

Evonik Immobilien GmbH manages around 60,000 company-owned residential units in Germany. In addition, it has a 50% stake in the TreuHandStelle GmbH, which manages more than 70,000 residential units. Evonik Immobilien GmbH is to be amalgamated with TreuHandStelle GmbH and placed on a more independent basis in the medium term.^[12]

Corporate Responsibility

In 2008, Evonik Industries developed its Corporate Responsibility (CR) strategy as an inherent part of the corporate strategy and corporate culture. Three principles constitute the basic modules of the company´s CR^[15]:

• The Code of Conduct represents the most important corporate policy principles and standards and is binding for all employees worldwide.
• The Global Social Policy obliges the employees to adhere to core values based on international rules and standards.
• The ESHQ Policy sets out the commitments of Evonik Industries regarding the corporate values Environment, Safety, Health and Quality (ESHQ).

Evonik Industries is a member of the United Nations Global Compact. Furthermore, the company is committed to the Responsible Care initiative to constantly improve the company´s performance in health, security, environment and product stewardship. The annual CR report of Evonik Industries is based on the standards of the Global Reporting Initiative.

Sponsoring

• Evonik is the main sponsor of Borussia Dortmund (BVB) since season 2006/2007
• Evonik was one of the sponsors of the World Chess Championship 2008
• Evonik supports the work of the epicopal activity "Adveniat" for the improvement of the environment in Latin America

References

1. ^ ^{a b} "Facts & figures 2010". Evonik. http://corporate.evonik.com/en/company/facts-figures/pages/default.aspx. Retrieved 2011-05-25. 
2. ^ "RAG may sell more Evonik shares to individual investor prior to IPO - Evonik CEO". Forbes. 2008-06-12. http://www.forbes.com/afxnewslimited/feeds/afx/2008/06/12/afx5107870.html. Retrieved 2008-07-11. 
3. ^ Eva Kühnen (2008-04-01). "Evonik says owners drop IPO plans for now". Reuters. http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSL0120193720080401. Retrieved 2008-07-11. 
4. ^ Matthias Inverardi; Philipp Halstrick (2008-06-03). "CVC to pay 2.4 bln eur for Evonik stake-sources". Reuters. http://www.reuters.com/article/privateEquity/idUSL0383147420080603. Retrieved 2008-07-11. 
5. ^ Peter Dinkloh (2008-06-11). "Russia's Gazprom says gas prices to keep rising". Reuters. http://www.reuters.com/article/rbssEnergyNews/idUSL1175446220080611. Retrieved 2008-07-11. 
6. ^ Matthias Inverardi (2011-09-23). "Germany's Evonik postpones IPO on weak markets". Reuters. Archived from the original on 2011-09-23. http://www.webcitation.org/61uz7lXYD. Retrieved 2011-09-23. 
7. ^ "Ownership structure of Evonik Industries AG". Evonik. http://corporate.evonik.de/en/investors/Ownership-structure/Pages/default.aspx. Retrieved 2011-05-26. 
8. ^ "Abstract of Degussa in the Third Reich". Evonik. http://geschichte.evonik.de/sites/geschichte/en/chemicals/history/degussa/degussa-ns/Pages/default.aspx. Retrieved 2011-05-30. 
9. ^ "From Cooperation to Complicity: Degussa in the Third Reich". Project MUSE. http://muse.jhu.edu/journals/hgs/summary/v019/19.3wiesen.html. Retrieved 2011-11-17. 
10. ^ "From Cooperation to Complicity: Degussa in the Third Reich". Project MUSE. http://muse.jhu.edu/journals/hgs/summary/v019/19.3wiesen.html. Retrieved 2011-11-17. 
11. ^ Bernstein, Richard (14 November 2003). "Berlin Holocaust Shrine Stays With Company Tied to Nazi Gas". New York Times. http://www.nytimes.com/2003/11/14/world/berlin-holocaust-shrine-stays-with-company-tied-to-nazi-gas.html?src=pm. Retrieved 2011-05-30. 
12. ^ ^{a b} Maria Sheahan (2009-12-17). "Evonik to split off property, power ops in revamp". Reuters. http://www.reuters.com/article/2009/12/17/evonik-idUSLDE5BG0TI20091217. Retrieved 2011-05-30. 
13. ^ "Operational divisions". Evonik. http://corporate.evonik.de/en/company/profile-organisation/operational-divisions/Pages/default.aspx. Retrieved 2011-05-26. 
14. ^ "Rhein-Ruhr consortium of municipal utilities becomes new majority owner of Evonik Steag GmbH". Evonik. http://corporate.evonik.com/en/media/archive/pages/news-details.aspx?newsid=17978. Retrieved 2011-05-26. 
15. ^ "Corporate Responsibility at Evonik". Evonik. http://corporate.evonik.de/en/responsibility/corporate-values/Pages/default.aspx. Retrieved 2011-10-14. 

Bibliography

• Peter Hayes, From Cooperation to Complicity: Degussa in the Third Reich (Cambridge, Cambridge University Press, 2004).

External links

• Evonik Industries website