BASF and Domo Chemicals to acquire Solvay’s polyamide business

Article by Amanda Jasi

BASF, Solvay, and Domo Chemicals have reached an agreement for the acquisition of Solvay’s polyamide business for €1.6bn (US$1.7bn) overall.

In September 2017, BASF signed an agreement with advanced materials and specialty chemicals company Solvay to acquire its integrated polyamide business for €1.6bn. The agreement received conditional approval from the EU Commission in January this year. The conditions included divesture of Solvay’s European polyamide 6.6 facilities (PA6.6) to a third party.

BASF is now to acquire Solvay’s global, non-European PA6.6 business, including the company’s 50% share in Butachimie’s adipodinitrile (ADN) production as per the 2017 agreement. Backwards integration into important raw materials, such as ADN, will mean that BASF is present throughout the entire PA6.6 value chain, which will allow it to further increase its polymer production capacity.

BASF will acquire a total of eight production sites, located in Germany, France, China, India, South Korea, Brazil, and Mexico. Additionally, BASF will acquire three research and development centres in South Korea, China, and Brazil and six consultation centres in Asia, and North and South America.

Additionally, BASF will enter into a joint-venture (JV) with high-quality material engineering company Domo to produce adipic acid in France. The JV will employ around 650 people.

The business which BASF is to acquire, for €1.3bn, generated sales of €1bn in 2018. Around 700 Solvay employees will move to BASF.

BASF expects that the acquisition will allow it improved access to important growth markets in Asia and South Korea which will enable it to improve close collaboration with local customers. The deal will also enhance BASF’s engineering plastics product pipeline and portfolio, “which will strengthen the position of the company as a provider of innovative solutions for the transport, construction and consumer goods industries, among others”.

BASF intends to integrate the acquired businesses into its existing Monomer and Performance Materials divisions.

In addition to the JV with BASF, Domo will acquire Solvay’s European PA6.6 business for €300m. Domo’s acquisitions include Engineering Plastics operations in France and Poland, High Performance Fibres in France, and Polymer and Intermediates operations in France, Spain, and Poland. Domo will also acquire commercial activities in Germany and Italy. Currently, Solvay’s European PA6.6 business has about 1,100 employees.

According to Domo CEO Alex Segers, Solvay’s reputable Technyl engineering plastics will “perfectly complement” Domo’s Domamid and Econamid polyamide ranges.

The acquisition is expected to strengthen Domo’s downstream nylon-based engineering plastics business – polyamides are also known as nylons – “ and create a European leader with scale, entering the market with a top position in PA6/6.6 in Europe”. Domo expects to achieve a backward integrated business with “unique technology capabilities and a secured supply of key raw materials. There will be a strong focus on driving combined innovation, whilst accelerating future growth.”

Domo expects that the acquisition will help it grow its turnover from €900m to €1,600m.

Segers said the acquisition is “a major step forward”.

“By integrating the complementary strengths of the diverse teams and talents of both companies, we will enhance our excellence towards our customers by building a unique and competitive integrated Nylon solution provider (6 and 6.6) driven by a strong innovation platform to push future sustainable growth.”

All the companies will continue to run their businesses separately until transaction completion, which is expected by the end of 2019.

Article by Amanda Jasi

Staff reporter, The Chemical Engineer

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