An affiliate of private equity group Lone Star has agreed to buy BASF’s construction chemicals business for €3.17 billion on a cash and debt-free basis. The acquisition is expected to close in the third quarter of 2020, subject to antitrust approval.

Media reports last month revealed that BASF was exclusively negotiating with Lone Star, which beat off a rival consortium that included Cinven and Bain Capital. The agreement closes the search for a buyer that started in January.

“Our aim was to find a new home for our construction chemicals business where it can leverage its full potential,” said Saori Dubourg, member of BASF’s board of executive directors and responsible for the construction chemicals business. “Under the umbrella of Lone Star, the construction chemicals team can focus on a growth path with an industry-specific approach.”

Donald Quintin, Lone Star’s president of Europe, added that the business complements its investments in the construction materials industry. Lone Star already owns German building materials manufacturer Xella, which it bought in April 2017 from private equity owners PAI Partners and Goldman Sachs.

With more than 7,000 employees, BASF’s construction chemicals business operates production sites and sales offices in more than 60 countries and generated sales of about €2.5 billion in 2018.

Analysts have said that BASF, which originally bought the business from Degussa in 2006, never managed to reconcile the construction chemicals unit’s dependence on small- to mid-size builders with its German owner’s focus on large industrial customers.

The signing of the agreement has immediately affected BASF’s financial reporting. Retroactively as of Jan. 1 2019, the sales and earnings of the construction chemicals division are no longer included in the group’s sales and EBITDA. Prior year figures will be restated accordingly.