Chemicals sector comment – October 2012

Date

Recent news of BASF’s plans to acquire Becker Underwood Inc for USD 1.02bn fits perfectly with the company’s strategy to invest in areas less cyclical than its core chemicals and plastics businesses. The deal represents BASF’s largest since its acquisition of Cognis for USD 3.7bn in 2010.

Becker Underwood, which expects sales of $240m in 2012 is a global provider of seed treatments, biological crop protection products, gardening products and animal nutrition and will boost BASF’s farming pesticides division enabling the company to keep up with larger pesticides rivals Syngenta, Bayer and Dupont’s Pioneer unit. Becker Underwood has 10 production sites worldwide and 479 employees. As part of the acquisition, Becker Underwood’s seed treatment, biological crop protection, plant health and water and resource management activities will be merged in to a new strategic global business unit called Function Crop Care, part of BASF’s Crop Protection division. Becker Underwood’s animal nutrition business will be integrated into BASF’s Nutrition & Health division.

The transaction provides an exit for Norwest Equity Partners who acquired the company in 2004 and subject to approval should complete by the end of 2012.

Following this announcement were rumours of BASF’s interest in acquiring Clariant AG, the Swiss specialty chemicals company with a market cap of USD 4.5bn. It is thought that BASF is particularly keen on the company’s catalyst business. Both BASF and Clariant have declined to comment.

Deals

US based private equity firm Arsenal Capital Partners Inc has acquired a majority stake in IGM Resins BV, a Netherlands based company engaged in the development, manufacturing and supply of products and technical services to the global UV Ink and Coating industry. The acquisition will enable Arsenal to expand its portfolio and develop expertise in the Speciality Chemicals and Materials sectors.

ChemCom Investments BV has acquired Dynea BV, a Netherlands based operator of resins plant. ChemCom Investments BV is an investment vehicle formed by the former and current members of the management team of Dynea BV. The transaction will enable the seller Dynea Oy to concentrate on its core businesses.

Japan based Polyplastics Co Ltd has acquired LCP Leuna Carboxylation Plant GmbH, a German based manufacturer and supplier of p-HBA and its by-product K2SO4. The acquisition will enable Polyplastics to strengthen the technical advantage of its LCP business and to provide more enhanced products to its customers.

Aurelius AG has completed the acquisition of the Norwich, UK manufacturing site of Bayer Cropscience AG, the German based crop science company engaged in crop protection, non-agricultural pest control, and seeds and plant biotechnology. The acquisition is in line with Aurelius’s strategy to focus on expanding its product portfolio and increasing contract production for third-party customers, as well as exploiting the marketing expertise of existing affiliates in the specialty chemicals area.

Reliance Global Holdings Pte Ltd has agreed to acquire BP Chemicals (Malaysia) Sdn Nhd (BPCM), the purified terephthalic acid (PTA) production interests of BP plc for USD 230m. Reliance is an obvious buyer given that RECRON Malaysia, part of the Reliance Group, is already BPCM’s largest customer in Malaysia. BP intends to focus its PTA strategy on deploying new technologies in to high growth markets such as China and OECD markets where their technology gives them an advantage and high utilisation rates.

SC Fabryo Corporation Srl, a Romanian dyes and paints company and Atlas Corporation, a Romanian construction components and paints maker, have agreed to merge their operations. Atlas Corporation, majority owned by Chroma Holdings, will spin off Atlas Paints, with Chroma Holdings becoming the majority shareholder.

Private equity firm Wise Venture SGR SpA is to acquire Biolchim SpA, an Italian producer of water-soluble fertilizers. The acquisition will provide an exit for private equity firm IMI Fondi Chiusi SGR SpA.

Solvay SA has agreed to acquire a controlling interest in Sunshield Chemicals Ltd, an Indian company specialising in surfactants. The acquisition will enable Solvay’s Novecare business to accelerate growth plans in India for the home and personal care, agrochemicals, coatings and industrial applications market. Solvay is determined to double its sales in India by 2015.

Clariant AG has announced a partnership agreement with Emerald Technology Ventures AG. The companies will work together to identify opportunities to invest in or cooperate with technology companies active in the cleantech area, a fast growing segment driven by the need for speciality chemicals.

Ecover Belgium NV has acquired Method Products Inc, a US based cleaning soap, detergent and cleaning products manufacturer. The acquisition will provide Ecover with a strategic position in the US market and provide Method Products with an experienced European partner.

VWR International LLC has acquired the mining supply business of Klen International (74) Pty Ltd, an Australia based cleaning and sanitation chemicals manufacturer and wholesaler. The acquisition adds to VWR’s existing global supply network of facilities and will enable them to meet the growing needs of mining customers around the world.

BASF SE plans to acquire Becker Underwood Inc, a global provider of technologies for biological seed treatment, seed treatment colours and polymers and products in the areas of biological crop protection, turf and horticulture, animal nutrition and landscape colorants and coatings, for USD 1.02bn. The transaction will provide an exit for private equity firm Norwest Equity Partners (NEP) and will enhance BASF’s competencies in innovative solutions for agriculture, especially in North America.

Velox GmbH has acquired the composites business unit of Azelis SA, a Belgium based chemical products distributor. VR Equitypartner and CBG Commerz Beteiligungskapital provided mezzanine capital for the transaction.

Gnann GmbH & Co. KG has acquired the chemical trading business of Hansa Group AG, a European supplier of Care Chemicals. The transaction will enable Hansa to focus on the detergent, household products and body care value-chain and create more efficient operating structures whilst providing additional finance to strengthen its core business.