German chemical industry leader BASF won conditional European Union regulatory approval on Tuesday for its 3.1 billion Euro purchase of smaller peer Cognis to reinforce its presence in the cosmetic additives market.

The European Commission said the condition of the merger was BASF's divestment of its activities in the hydroxy monomers, a chemical product used in coatings and adhesives.

BASF unveiled the deal in June, forecasting a boost in earnings per share from 2012 from the acquisition. The takeover will add products such as additives for cleaning products and chemicals derived from palm, coconut and corn.

"The proposed transaction, as initially notified, would have created a very strong player in a market where concentration is already high," the Commission said in a statement. "To remedy the Commission's concerns, BASF offered to divest activities in the sector in question."

BASF's core chemicals and plastics business is heavily dependant on industries such as autos and construction, both of which were hit hard by the economic crisis. It expects to close the Cognis deal in November.