As widely speculated, chemicals and coatings giant BASF SE (Ludwigshafen, Germany) will acquire specialty chemicals company Cognis from Cognis Holding Luxembourg S.à r.l., a company controlled by Permira Funds, GS Capital Partners, and SV Life Sciences.
Under an agreement announced Wednesday, BASF will acquire Cognis (Monheim, Germany) for 700 million euros (approximately $856 million) and the assumption of debt and pension obligations, putting the value of the deal at 3.1 billion euros, or approximately $3.8 billion.
The acquisition is subject to approval by regulatory authorities, with closing of the transaction expected in November at the latest, BASF said. The pending deal had been widely reported in the media in Europe, but was formally announced Wednesday.
“With the acquisition of Cognis, we are strengthening our portfolio with cyclically robust and profitable businesses and further expanding our position as the world’s leading chemical company,” said Dr. Jürgen Hambrecht, chairman of the Board of Executive Directors of BASF SE.
Cognis is a worldwide specialty chemicals supplier, with a product portfolio that includes materials based on renewable raw materials, and markets products to the health and nutrition, cosmetics, detergents and cleaners, paint and coatings, mining, lubricants, and agriculture markets. The company employs about 5,500 people, and operates production sites and service centers in 30 countries.
Cognis was created in 1999 from the chemicals business of Germany-based Henkel. Since November 2001, Cognis has been owned by Cognis Holding Luxembourg S.à r.l., which is controlled by Permira Funds, GS Capital Partners, and SV Life Sciences.
In 2009, Cognis reported sales of about 2.6 billion euros and EBITDA (earnings before interest, taxes, depreciation, and amortization) of 322 million euros. BASF said the business will be integrated into its Performance Products segment, which reported 2009 sales of 9.4 billion euros. The segment encompasses a range of products, including coatings.
Cognis’s products for coatings include additives such as coalescing agents, defoamers, rheology modifiers, wetting agents, and dispersants, and epoxy curing agents.
“With the support of our owners Permira Funds and CS Capital Partners, we have become a leading innovative supplier of specialty chemicals,” said Dr. Antonio Trius, Cognis CEO. “In particular, our focus on wellness and sustainability and our expertise in renewable raw material-based products have been our main success factors. We are convinced that there are excellent opportunities through combining the strengths of Cognis and BASF.”
Dr. John Feldmann, the BASF board member responsible for the Performance Products segment, said the acquisition will contribute to the company’s objective to assume a stronger position in personal-care ingredients, and to “strengthen our leading position in value-added products for home care and establish a strong position in health and nutrition products,” He said that with the deal, “we will in particular expand our portfolio with products based on renewable raw materials.”
BASF is the world’s largest chemical company, with 2009 sales of more than 50 billion euros. The company’s product portfolio includes chemicals, plastics, performance products, agricultural products, fine chemicals, and oil and gas.