Akzo Nobel and BASF are in talks about a sale of the German conglomerate’s industrial coatings business to the Dutch paints and coatings specialist. The two chemical players have confirmed recent speculation about a possible deal, while declining to reveal details. The price of the deal has been estimated in the €400-500 million range.

Speculation that BASF was looking for a buyer for the business, which has production facilities at Münster and Oldenburg, Germany, and manufactures in particular e-coats, spray and dip coatings for diverse metal appliances as well as industrial buildings first surfaced in November  of last year.

Industrial coatings are a niche application within the BASF Coatings segment, which depends on the automotive industry for around three-quarters of its €3 billion annual sales, and are considered too small to generate the type of revenue the Ludwigshafen group seeks. Moreover, much of the business faces competition from low-cost producers. In a statement, the Dutch group said “value-generating bolt-on acquisitions” fit well with its strategy to drive operational excellence and organic growth.

Most analysts believe the industrial coatings activities would be in better hands with AkzoNobel, whose industrial business – part of the €5.6 billion Performance Coatings segment – reported sales of nearly €780 million in 2014.

The strengthening of its industrial coatings arm could help the Dutch player compensate for weakness in markets for building and infrastructure coating. In its earnings statement for 2015, AkzoNobel said these fields are unlikely to see any significant improvement, at least in Europe, in 2016.