Degussa sells construction chemicals activities to BASF

By Liz White, UT staffDüsseldorf, Germany-Degussa AG is selling its Construction Chemicals activities to BASF AG in a transaction valued by BASF at Euro 2700 million $3345 million). This includes Euro 500 million of debt assumed by Ludwigshafen, Germany-based BASF. Degussa announced 14 Dec 2005 that it was considering the sale of this business: BASF instantly jumped in to express its interest, stressing that it would like sole negotiation rights. BASF's 1 Mar statement on the sale agreement said two companies aim for the transaction-subject to regulatory and other approvals-to be finalised by the middle of this year. Degussa's construction chemicals unit has an excellent position in the industry and offers BASF an attractive means of forward integration in its existing value chain in construction chemicals," commented Dr Andreas Kreimeyer, BASF board member responsible for Performance Products. The acquisition allows us to tap into the growth potential of the construction chemicals market on a sustainable basis and will further expand our position in this high-yield industry," Kreimeyer added. BASF said the global construction chemicals market has an annual value of about Euro 13 000 million, adding that it "is attractive in view of annual growth of about 4 to 5 percent, relatively stable margins and high potential for innovation." Adding the Degussa unit will give BASF quick access to additional industrial customers and end-users, the group added. And also, BASF said its strong Asian presence will allow growth opportunities in the booming construction sector in the region.BASF also pointed out that it can combine its own chemical expertise with Degussa's know-how in construction chemicals uses, and so offer its customers the innovative products needed in this competitive sector. Degussa's Construction Chemicals activities generated sales of Euro 1800 million and an EBIT (earnings before interest and taxes) of Euro 201 million for fiscal 2004. Sales for the first nine months of 2005 came to Euro 1500 million with EBIT of Euro 174 million, Degussa said. The business has about 7400 employees globally, marketing some 40 000 products worldwide. The business operates in two segments: admixture systems and construction systems, with various PU-related products in construction systems. This business supplies many products to customers in the building trade who specialise in concrete and masonry renovation, waterproofing, sealing, adhesive systems, tile fixing, performance flooring, coatings and façades, exterior insulation and expansion joints.BASF already supplies chemical precursors to formulators of construction chemical products, such as polymers to improve the flow properties of concrete, protect its surface, or for concrete repair. Other applications for functional polymers made by BASF include adhesives for flooring and tiling, sealants, water-vapour barriers and primers. BASF also supplies wood coatings and polyurethane systems for installation purposes.The picture shows one use of Degussa's construction chemicals activities-its Conipur polyurethane based sports surfaces, at the Atatürk Olympic Stadium in Istanbul, the venue for the ChampionsLeague Final in 2005. Some 7250 sq.m of Conipur SW was laid on the running track and a further 5100 sq.m of Conipur TE was laid around the border."