BASF to Acquire Solvay Polyamides Business in EUR1.6 Billion Deal

By Marc Bisbal Arias Features Dow Jones Newswires

BASF SE (BAS.XE) said Tuesday it would buy Solvay SA's (SOLB.BT) polyamides business for 1.6 billion euros ($1.92 billion), in a move to bolster its engineering plastics portfolio and improve access to growth markets.

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The deal covers Solvay's upstream and downstream polyamides business in Europe, North America and Asia, as well as its downstream engineering plastics operations in Latin America. Solvay will retain its upstream intermediates and downstream textile polyamide business in Latin America.

BASF said the businesses it is buying had net sales of EUR1.32 billion in 2016 and earnings before interest, taxes, depreciation and amortization of around EUR200 million.

Belgium-based Solvay expects net cash proceeds from the deal to be around EUR1.1 billion, and restated recent results and guidance to reflect the sale.

The companies aim to close the transaction in the third quarter of 2018.

The deal will give BASF critical mass in its downstream polyamides business, Peter Spengler at DZ Bank said. BASF plans to integrate the acquisition into its performance materials and monomers divisions.

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Solvay Chief Executive Jean-Pierre Clamadieu said the planned divestment was key to its transformation into a multispecialty chemicals, a strategy that involves rejigging its portfolio to focus on advanced technologies.

Solvay said the divestment will reduce 2017 Ebitda growth since the polyamide business performed strongly this year. The strong euro will also hit profit reported in euros and Solvay estimates underlying Ebitda growth of 6%-8%, based on current exchange rates.

The Belgian company will reclassify the divestment as discontinued operations at the end of September. As a result, the retained Latin American business will incur an impairment of about EUR100 million, which should be more than offset by transactional gains, it said.

Solvay also restated sales for 2015, 2016 and the first half of 2017, with the latter figure reduced to EUR5.18 billion from EUR5.99 billion. Ebitda and operating profit were also adjusted, but net income didn't change, according to Solvay.

Write to Marc Bisbal Arias at marc.bisbalarias@dowjones.com

(END) Dow Jones Newswires

September 19, 2017 04:42 ET (08:42 GMT)