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BASF Grows Coatings Arm in $3.2B Deal

Wednesday, June 22, 2016

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Known as a multi-national chemicals manufacturing corporation, BASF is expanding its coatings portfolio through the acquisition of a global surface treatment business.

The Ludwigshafen, Germany-based manufacturer announced Friday (June 17) that it has signed an agreement to acquire Chemetall, a global business unit of specialty chemical company Albemarle Corporation, at a purchase price of $3.2 billion.

“Chemetall offers a strong strategic fit for our coatings business, and supports BASF’s aim to grow profitably in downstream, innovation and solution-focused businesses,” said Wayne T. Smith, member of the Board of Executive Directors of BASF SE, responsible for the coatings division.

auto paint line
BASF

BASF plans to expand its coatings division with the acquisition of Chemetall, which will give it increased access to key growth industries such as the automotive and aerospace markets, it says.

The all-cash deal is expected to close by the end of 2016 and is subject to approval by the relevant authorities and other customary closing conditions.

The transaction value is subject to reduction at closing based on certain pension obligations and further adjustment for cash, debt, and variation of working capital versus a targeted amount, Albemarle noted in its announcement of the sale Monday (June 20).

This transaction is BASF's largest since its 2010 acquisition of Cognis, a maker of ingredients for cosmetics and detergents, for $3.5 billion, according to Reuters.

Applied Surface Treatments

Chemetall, headquartered in Frankfurt, Germany, specializes in metal surface treatment chemicals that offer protection from corrosion, prepare parts for the painting process and ensure coating adhesion.

These chemicals are used in a wide range of industries and end markets, primarily automotive, aerospace, coil and metal forming.

The company reported $845 million in sales in 2015.

“Chemetall complements our current portfolio by adding the highly attractive surface treatment business to our coatings offerings,” said Markus Kamieth, president of BASF’s coatings division.

automotive components wheel production
Chemetall

Chemetall specializes in metal surface treatment chemicals that offer protection from corrosion, prepare parts for the painting process and ensure coating adhesion in the automotive, aerospace, coil and metal forming markets.

According to BASF presentation materials, the acquisition will give BASF access to key growth industries such as automotive and aerospace and further enhance its global footprint with localized production and technical centers in China and India.

Expanded Expertise

It also welcomes the addition of Chemetall’s high-quality resources and technical expertise.

“We look forward to joining forces with Chemetall’s industry-leading expert team to further advance innovation and know-how-driven surface technologies for our customers around the world,” Kamieth added.

Chemetall has approximately 2,500 employees spread among 21 production sites, 10 research and development sites and 24 sales offices in more than 20 countries.

Albemarle’s Perspective

Albemarle had acquired Chemetall as part of its acquisition of Rockwood Holdings in January 2015.

Chemetall was part of that deal, but Albemarle’s interest in Rockwood was more about its lithium chemicals business, which is experiencing growth in the electric-vehicle battery sector, Chemical & Engineering News reported.

For Albemarle, the sale is expected to help to maximize shareholder value by "investing in the future growth of our high priority businesses, reducing leverage and returning capital to shareholders,” according to company President and CEO Luke Kissam.

BASF Coatings division site
BASF

BASF’s coatings division, located in Munster, Germany, is reportedly one of the largest coatings production sites in the world.

"I would like to thank the Chemetall management team and employees for their exceptional performance and professionalism,” he said, adding, “For BASF, the purchase of Chemetall represents a unique opportunity to acquire an industry-leading surface treatment business with a proven track record of success."

About BASF’s Coatings Division

BASF’s coatings division focuses on the development, production and marketing of innovative and sustainable automotive OEM and refinish coatings, industrial coatings, and decorative paints.

BASF shares the skills, knowledge and resources of its interdisciplinary and global teams through a collaborative network of sites in Europe, North America, South America and Asia Pacific.

In 2015, the coatings division reported global sales of about $3.6 billion.

   

Tagged categories: Acquisitions; Adhesion; Aerospace; Automotive coatings; BASF; Business matters; Coating Materials; Coil coatings; Corrosion protection; Industry News; Mergers; Metal coatings; South America; Surface preparation

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