BASF Offers EU Concessions on Solvay PA Deal

BASF has offered concessions to address European Commission’s concerns about the effect of its planned acquisition of Solvay’s global integrated polyamide (PA) business on competition in Europe. The German chemical giant said it has offered to refrain from acquiring certain parts of the business, including European innovation capabilities and manufacturing assets

The €1.6 billion cash and debt-free deal was first proposed in September 2017. In June 2018, the EU regulatory authority opened an in-depth Phase II probe. The Commission is now scrutinizing the offer and will submit it for market testing before completing the review procedure.

The transaction comprises Solvay's upstream and downstream PA activities in Europe, North America and Asia, as well as its Latin American downstream engineering plastics operations and involves some 2,400 employees. The business with net sales of around €1.3 billion and EBITDA of about €200 million comprises 12 global production sites, four R&D centers and 10 technical support facilities.

In addition to widening its engineering plastics product portfolio, with the buy BASF is keen to seize the chance to back-integrate the business into key raw materials, enhancing its access to key growth markets in Asia and South America as well as strengthening the value chain, in particular through improved access to adiponitrile (ADN).

In integrating the Solvay businesses, the Commission said other players fear BASF would have increased captive need for ADN, hexamethylene diamine, adipic acid, hexamethylenediamine adipate salt, PA 6.6 base polymer and compounded engineering plastic, thus further tightening supply of these products in an already tight market.

The EU is expected to make a final decision by early 2019. In the interim, the BASF and Solvay businesses will continue to operate separately. Approval by employee representatives is also required.

Acrylic dispersion capacity hike in Malaysia

In other news, BASF has announced it will expand capacities for acrylic dispersions at its site in Pasir Gudang, Malaysia, up to 2020. The new production line is aimed at supplying growing demand for acrylic dispersions for construction, coatings and adhesives.

Plans also include a revamp of the wastewater treatment facility, with the addition of a condensed water stripping system. Jeff Knight, senior vice president, Dispersions and Resins Asia Pacific, said there is a growing need for the latest generation of innovations, including low-VOC low-odor acrylic dispersions for architectural coatings, construction and adhesives industries.

BASF began production of dispersions in at the Malaysian site in 2015, and currently operates one line there.