The German chemical group BASF has agreed to acquire the global polyamide business of Belgian competitor Solvay for 1.6 billion euros, which will strengthen its nylon business.
With this acquisition, BASF will enrich its engineering plastics portfolio and increase access to key markets in Asia and South America, according to a statement from the German chemical industry giant on Tuesday.
Belgian Solvay has taken another step in its strategy of selling off a range of low-profit products and focusing on specific demands in the aerospace, automotive, and oil and gas industries where it can achieve higher margins.
Its global polyamide business generated earnings before interest, taxes, depreciation, and amortization (EBITDA) of 200 million euros last year and employs around 2,400 people.
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Its main competitors in this area are elastane fiber (lycra) manufacturer Invista, owned by Koch Industries, and Ascend, owned by SK Capital.
With the acquisition, BASF will strengthen its activities in the nylon sector, specifically polyamide 6,6, an engineering plastic resistant to high temperatures used in the textile industry as well as for industrial parts, such as pipes, fans, and similar.
Solvay has indicated that due to the sale of this part of the business, as well as a stronger euro, the growth of core earnings at the group level this year will slide to between six and eight percent, compared to initially estimated rates approaching double digits. The revenue from the sale will be used to reduce debt.
“This is likely the last significant step we are taking towards the transformation of the group,” said Pascal Juery, a member of Solvay’s executive board.
