BASF announced on Thursday May 3, 2018 that it’s paper and water chemicals business shall be merged with Solenis, Water Technologies business of Ashland which was acquired by Clayton, Dubilier & Rice in 2014. Water treatment chemicals is a fast-growing chemical category, while paper chemicals include vaste range of chemicals ranging from chlorine dioxide to paper coating chemicals. BASF is shall include we-end paper business and water business with Solenis while excluding the paper coating business from the deal. Further, BASF’s Ludwigshafen (Germany) and Nanjing (China) plants are also excluded from the deal. Both the companies shall work independently till the transaction completion which is expected to conclude by end of this year.
- Ownership: BASF would hold 49% share of the merged entity while Clayton, Dubilier & Rice (a private equity firm) shall hold 51% of the business, although financial terms of the transaction were not disclosed.
- Operations: The merged entity shall have around 5000 employees with approximately €2.4bn in revenues
- Coverage: The business shall have across geography coverage with operations in countries of the US, the UK, Mexico, India, and Australia.
The strategy of specialization continues
The current business move seems in alignment of the industrial movement of specialization which has been generating more revenues for the stakeholders than the diversified conglomerate companies. The given merger is part of active portfolio management from BASF and merged entity which shall have focused specialization of water and paper chemicals, is expected to generate higher stakeholder value working separately from the parent company.
BASF is one of the largest conglomerate in chemical industry and has exposure across industries and geographies. The organization operated through five segments namely: Chemicals, Functional Materials & Solutions, Performance Products, Oil & Gas, and Agricultural Solutions.
Solenis is the the specialty chemical manufacturing company with exposure on water-intensive industries. The industrial exposure cuts through sectors such as biorefinery, mining, minerals processing, chemicals processing, pulp & paper, oil & gas among others.
– Ankur Kalra,