Through the sale of an additional 6.9% of engineering plastics producer Covestro for €1 billion, Bayer has ceded control of its former group company known earlier as Bayer MaterialScience.

Under a control termination agreement that took effect from Sept. 30, Bayer will refrain from exercising certain voting rights at the Covestro annual general meeting, so that the plastics company will no longer be fully consolidated in the former parent’s consolidated financial statements.

Covestro will be reported as a discontinued operation in Bayer’s financial reporting for the third quarter of 2017. For continuing operations, Bayer’s key figures, including sales, EBITDA before special items, EBIT and core earnings per share, will be adjusted retrospectively to exclude Covestro’s contributions.

In addition, all assets and liabilities allocated to Covestro will not be included in Bayer’s statement of financial position as of Sept. 30, 2017. The remaining Covestro interest will be carried at the current market value, and, from Oct. 1, 2017, accounted for using the equity method.

With the share sale, Bayer has taken a major step toward its goal of a full separation from Covestro in the medium term, CEO Werner Baumann said.  The former parent company’s stakeholding is now only 24.6%, but the Bayer Pension Trust continues to hold 8.9%.

Buyers of the Covestro shares have agreed to a lock-up arrangement that stipulated they may not be sold before Dec. 11, 2017 at the earliest. Bayer said it will retain economic exposure to the price of these shares until at least the same date.