BASF agrees to buy Degussa's construction chemicals business for 2.7 billion euros

BASF Aktiengesellschaft, Ludwigshafen, said it has reached an agreement with Degussa AG, Düsseldorf, to acquire Degussa's construction chemicals business.

The purchase price for equity is just under 2.2 billion euros. As a result, the transaction value for BASF is 2.7 billion euros.

Subject to approval from the relevant authorities, the deal is expected to close by the middle of 2006.

"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," said Dr Andreas Kreimeyer, member of the Board of Executive Directors of BASF Aktiengesellschaft, responsible for the Performance Products segment.

"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."

The global construction chemicals market is valued at around 13 billion euros and is attractive in view of annual growth of about 4-5%, relatively stable margins and high potential for innovation.

In fiscal 2004, Degussa's construction chemicals division posted sales of about 1.8 billion euros and an EBIT of 201 million euros, with a global workforce of about 7,400 employees. The division markets about 40,000 products worldwide and is organized in two segments - admixture systems and construction systems.

BASF supplies chemical precursors to the construction chemicals industry, in particular to formulators of construction chemical products.