According to financial circles, the Mainz-based special glass manufacturer Schott is working on an IPO for the pharmaceuticals division, which produces glass tubes for pharmaceutical bottles, among other things.
(Photo: imago images/Addictive Stock)
Frankfurt The foundation company Schott is working on an IPO for the glass medicine packaging business. According to financial sources, the company has selected Deutsche Bank, Bank of America and BNP Paribas to organize the IPO early next year, which could value the division at up to four billion euros. A spokesman for the company said when asked: “Of course we are constantly reviewing strategy and financing options. However, there is nothing concrete to report at the moment.” The banks declined to comment.
Among other things, Schott manufactures pharmaceutical tubes, from which the company itself, but also other customers, produce small bottles for vaccines, and thus benefited from the Covid pandemic. In 2021 alone, the company delivered vials for five billion vaccinations. In the current year, production should reach a similar level. However, the pharmaceutical business also includes glass packaging for various other applications or syringes and ampoules.
According to financial circles, Schott expects earnings before interest, taxes, depreciation and amortization (Ebitda) of around EUR 200 million in the pharmaceutical business this year with sales of around EUR 1 billion. When it goes public, the division could be valued at around 20 times expected Ebitda. Should the entire business come to the floor, the IPO could reach a volume of 3.5 to over four billion euros. It would be a rating on par with competitor Stevanato.
As with most new issues, Schott only wants to list a minority stake. Statements by the company indicate that Schott intends to retain the majority in the longer term. “Our pharmaceutical business is and will remain a core component of our growth strategy,” said the Schott spokesman. He did not want to comment on business figures for the division. “We are very satisfied with the positive development – under our own steam,” he said simply.
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According to information from financial circles, the company hopes that the market environment will change by early 2023. Currently, given the volatility in the stock markets, IPOs are almost impossible.
Foldable glass should bring new sales
The Mainz special glass manufacturer is 100 percent owned by the Carl Zeiss Foundation. In the past fiscal year 2020/2021 (until September 2021), the company increased its sales by 13 percent to 2.5 billion euros, the operating profit (EBIT) even grew by 35 percent to 390 million euros. One of the drivers of this growth was the pharmaceutical business, alongside the household division. Schott is the inventor of the ceramic hob.
Schott boss Frank Heinricht relies heavily on innovations with glass. Among other things, the Schott experts have developed an ultra-thin, flexible lens. Special machines draw layers with a thickness of 30 to 40 microns from liquid glass at a temperature of 1400 degrees. That’s roughly the diameter of a human hair. This special glass is used, for example, in foldable smartphones or laptops with foldable screens.
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Schott also relies on new ideas in the pharmaceuticals sector. For example, the company has developed a carrier made of glass substrate and plastic that is intended to facilitate laboratory diagnostics. Blood can be dripped into up to 130 small wells, and a device can then analyze this for up to 130 parameters at the same time. However, such applications are probably not part of the packaging business, which is now to be listed on the stock exchange.
The sale of the vials for the Covid vaccine was not that relevant to sales growth in the past financial year, despite the enormously high production numbers. Schott boss Heinricht estimated the share at the presentation of the business figures at the beginning of the year at around 1.5 percent of total sales. This is mainly due to the low price that this product has.
The fact that the Schott management is looking for new sources of financing for its pharmaceutical division can also be related to the sharp rise in energy costs. Melting furnaces are operated with gas and have to run around the clock. Because of the Ukraine war, the price of this energy source has risen drastically in recent weeks. Should there even be an import stop for gas from Russia, Schott would feel it immediately.
More: Gas engine manufacturer Innio prepares for IPO.