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DIC to acquire BASF’s worldwide pigments business for $1.3 billion

August 29, 2019
Chemical Value Chain

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BASF has announced that DIC Corp. (Tokyo, Japan) will acquire BASF’s worldwide pigments business. The cost of the transaction is €1.15 billion ($1.27 billion) on a debt-free basis. The deal is expected to close in the fourth quarter of 2020, and is subject to the approval of the relevant competition authorities.

DIC says that the acquisition covers assets related to BASF’s pigments business—including technologies, patents, and other intellectual property, as well as goodwill not included in the share purchase—and the shares of 18 individual companies. BASF operates six pigments sites in Europe, one in Asia, and four in the US. It also owns four pigment R&D laboratories.

BASF announced in February that as part of its portfolio-management program, it intended to divest its worldwide pigments business. The operation generated sales of about €1 billion in 2018, has approximately 2,600 employees, and serves more than 5,000 customers worldwide. Responding earlier this year to CW’s question, Martin Brudermüller, chairman of BASF, said that the operation is no longer driven by innovation, is experiencing slow growth, and has many competitors in Asia.

“We have achieved our goal to find an owner who considers pigments a core strategic business,” says Markus Kamieth, board member/industrial solutions at BASF. “DIC pursues ambitious growth plans and has announced [its intention] to further develop the business in the coming years.”

DIC is active in three segments: packaging and graphics, functional products, and color and display. Color and display includes a portfolio of pigments. Through the acquisition, DIC says it will add functional pigments to its product portfolio. The company achieved consolidated group sales of ¥800 billion ($7.5 billion) in 2018.

DIC’s existing pigments business is a major worldwide producer of organic pigments and aluminum effect pigments. BASF’s pigments business is an established and prominent worldwide manufacturer of effect pigments for cosmetics and of specialty inorganic pigments. The pigment portfolios of DIC and BASF are complementary, with little product overlap, the companies say.

DIC says it is working to expand its functional pigments business with the aim of driving growth as a leading worldwide manufacturer of high-growth, high-value specialty pigments, including products for displays, cosmetics, and cars. “We have outlined a clear growth path for DIC with the target to increase our [group] sales to ¥1 trillion by 2025,” says DIC president and CEO Kaoru Ino. “In this context, BASF’s pigments portfolio is an important strategic addition in meeting our goals more expeditiously.”

DIC estimates that the worldwide pigments market is worth ¥2.3 trillion/year.

The company adds that it intends to use cash in hand and bridging loans to finance the BASF deal. DIC says that the impact of the purchase on its earnings for 2019 will be negligible.

By Kartik Kohli

Source: Chemical Week

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