BASF is merging its paper wet-end and water chemicals business into US specialty chemicals producer Solenis to form what it said will be a customer-focused global solutions provider with pro-forma sales of around €2.4 billion and around 5,000 employees.

Following all regulatory approvals, the deal is projected to close at the end of 2018 at the earliest. Financial terms were not disclosed.

The German chemical group will take a 49% minority stake in the enlarged company that will be based at Wilmington, Delaware, USA and continue to operate under the Solenis name. In line with its shareholding, BASF will nominate three of the seven members of the board of directors.

Funds managed by Clayton, Dubilier & Rice will hold the 51% majority. The private equity investor acquired the company formerly known as Ashland Water Technology for around $1.8 billion last year. Current CEO, John E. Panichella, will retain the position.

The transaction comprises BASF’s global paper wet-end and water chemicals business with 2017 sales of around €800 million and around 1,300 employees globally but not its paper coating chemicals portfolio.

Under the agreement, the German chemical giant will transfer its production sites and plants for paper wet-end and water chemicals in the UK, US, Mexico, India and Australia to the new enterprise. Integrated facilities at its Ludwigshafen headquarters and at Nanjing, China will not transfer but will deliver products and raw materials under mid- to long-term supply agreements.

The combined entity’s portfolio will cover the entire range of functional and process wet-end chemicals, solutions for the water cycle in paper mills, as well as comprehensive service capabilities. BASF said customers in the water treatment industry will benefit from Solenis’ high-quality service capabilities and the German partner’s broad water treatment chemicals platform.

Solenis currently produces specialty chemicals for water intensive industries, including pulp, paper, oil and gas, chemical processing, mining, biorefining, power and municipal markets. Its portfolio covers a broad array of process, functional and water treatment chemistries as well as state-of-the-art monitoring and control systems. Worldwide, the company has 35 manufacturing facilities with approximately 3,700 employees in 118 countries.