BASF Buys Solvay’s Polyamide Business for €1.6 billion
BASF is to acquire Solvay’s global integrated polyamide (PA) business for €1.6 billion on a cash and debt-free basis. The acquisition strengthens the German chemicals giant’s existing PA operations by boosting its presence in Asian and South American markets and giving access to key raw material adiponitrile (ADN).
The transaction comprises Solvay's upstream and downstream PA business in Europe, North America and Asia, as well as its Latin American downstream engineering plastics operations, involving around 2,400 employees in total. The business overall, which in 2016 posted net sales of €1.32 billion and EBITDA of around €200 million, comprises 12 global production sites, four R&D centers and 10 technical support centers.
Solvay said it will retain its upstream intermediates and downstream textile PA business in Latin America.
For the Belgian company, the divestment is a major part of CEO Jean-Pierre Clamadieu’s plans, which he started four years ago, to transform the group into a multi-specialty chemicals producer.
“The sale may mean that Solvay has a greater balance sheet with which to pursue acquisitions in the specialty space. We would expect a focus on differentiated businesses that add technologies to Solvay's diverse specialty base,” said Matt Dixon, managing director of London-headquartered corporate finance firm Corbett Keeling.
US investment management firm, Morningstar, viewed the price as fair in what it termed a relatively small transaction for both companies. The company said Solvay’s PA business has performed well over the past 18 months, with margins above mid-cycle levels.
The deal, which remains subject to customary regulatory approvals, is expected to close in the third quarter of 2018, after when the PA business will be integrated into BASF’s Performance Materials and Monomers divisions.
BASF has also had to obtain formal consent from Koch Industries, which has a joint venture with Solvay. Following the announcement, Invista, a wholly owned subsidiary of Koch Industries, said it welcomed BASF as a future partner in the Butachimie joint venture, subject to the satisfaction of certain conditions including the delivery of definitive documents with BASF.