BASF to Start Sale of 2.7 Billion Euros Construction Chemicals Arm

BASF to Start Sale of 2.7 Billion Euros Construction Chemicals Arm

BASF to Start Sale of 2.7 Billion Euros Construction Chemicals Arm

BASF SE has kicked off a sale process for its construction chemical business, which could fetch about 2.7 billion euros ($3 billion), people with knowledge of the matter said.

The German company has started to contact select interested parties, a BASF representative said in response to Bloomberg queries, declining to comment further. Carlyle Group LP and building-materials maker Standard Industries Inc. are among potential suitors considering offers for the unit, the people said.It could also attract interest from other private equity firms including Bain Capital, Cinven and KKR & Co., according to the people, who asked not to be identified because the information is private.

The BASF unit generated earnings before interest, taxes, depreciation and amortization of 245 million euros last year on 2.4 billion euros of sales, the people said. Potential bidders may seek to value the business at around 11 times earnings, according to two of the people.

BASF expanded in construction chemicals through its 2006 acquisition of a Degussa AG unit. The German company has struggled with scale as well as the complexity of the market, since local construction techniques can differ even from country to country.

Consolidation in the building-materials industry has strengthened the hand of enlarged companies when negotiating with suppliers of grouts, mortars and admixtures, which are added before or after mixing cement to enhance properties like drying times and water content. BASF Chief Executive Officer Martin Brudermueller announced a strategic review of the business in October, and the company has said it aims to reach an agreement by the end of this year.

Any transaction would add to the $34 billion in acquisitions of European chemical and industrial companies announced this year, according to data compiled by Bloomberg. CVC Capital Partners agreed in January to sell Parex Group to Sika AG for 2.5 billion Swiss francs ($2.5 billion) including debt, valuing the French producer of construction chemicals at 12.8 times earnings.

No final decisions have been made, and there’s no certainty the suitors will proceed to submit offers for the BASF business, the people said. Representatives for Bain, Carlyle, Cinven, KKR and Standard Industries declined to comment.

BASF to Start Sale of 2.7 Billion Euros Construction Chemicals Arm
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BASF to Start Sale of 2.7 Billion Euros Construction Chemicals Arm

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BASF to Start Sale of 2.7 Billion Euros Construction Chemicals Arm
BDC 282. July 2021

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BASF to Start Sale of 2.7 Billion Euros Construction Chemicals Arm