BASF and Solenis Agree to Combine Paper and Water Chemicals Businesses

BASF has agreed to merge its paper wet-end and water chemicals business with US-based Solenis, formerly Ashland Water Technologies.

The combined business, which had proforma sales of €2.4-bn ($2.88-bn), will be 49% owned by BASF, while funds managed by private equity firm Clayton, Dubilier & Rice will hold the rest, it said. The combined entity will operate under the Solenis name as a global speciality chemical company focused on paper technologies and industrial water technologies and will be headquartered in Wilmington, Delaware, USA.

The transaction comprises BASF’s global paper wet-end and water chemicals business with 2017 sales of around €800-mn and around 1,300 employees globally. The transfer includes production sites and plants of the paper wet-end and water chemicals business in Bradford and Grimsby, UK; Suffolk, Virginia, USA; Altamira, Mexico; Ankleshwar, India; and Kwinana, Australia. BASF’s paper and water chemicals production plants strongly embedded in the Verbund in Ludwigshafen, Germany, and Nanjing, China, are not transferred, and will deliver products and raw materials to the combined entity under mid- to long-term supply agreements.

BASF’s paper coating chemicals portfolio is not part of the transaction.

For the paper industry, the product portfolio of the combined company will cover the entire range of functional and process wet-end chemicals, solutions for the water cycle for paper mills, as well as comprehensive service capabilities. For the water treatment industry, the customers of the joint organisation will benefit from Solenis’ service capabilities and BASF’s broad water treatment chemicals platform. Financial terms of the transaction were not disclosed.

“The transaction underlines BASF’s active portfolio management and enables us to share in the future success of this promising joint entity,” said Dr. Markus Kamieth, member of the Board of Executive Directors of BASF SE and responsible for the Performance Products segment.

BASF has embarked on an organisational revamp recently. It has agreed to spend billions on agricultural seed assets from peer Bayer. BASF is also planning to merge its oil and gas division with rival DEA and float it on the stock exchange. But Dr. Martin Brudermueller, who will take over as CEO has thrown his weight behind the chemical group’s strategy of keeping divergent businesses folded into one company, at a time when its major rivals such as DowDuPont are breaking themselves up.