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Business

Dow Sells Superabsorbents

Deal with Degussa includes a Dow plant and an acrylic acid supply agreement

by Alexander H. Tullo
February 15, 2006 | A version of this story appeared in Volume 84, Issue 8

Degussa is acquiring Dow Chemical's business in superabsorbent polymers, the water-slurping raw material in disposable diapers, for an undisclosed amount.

The deal includes Dow Chemical's superabsorbent facility in Rheinmünster, Germany. In a toll manufacturing agreement, Dow will make superabsorbents for Degussa at its Midland, Mich., plant until early next year. Dow says it will then explore alternatives for that unit.

Dow has also agreed to supply to Degussa glacial acrylic acid, the primary raw material in superabsorbant polymers. Degussa says the supply agreement will help it expand capacity through small improvement projects at its Garyville, La., and Greensboro, N.C., plants as well as through capital projects at the Rheinmünster unit it is buying from Dow.

Dow says it is exiting the superabsorbents business because it is too small of a player to become an industry leader. "It was becoming increasingly difficult to justify the product and process research investments needed to satisfy large, global superabsorbent products customers," says Ted Cosse, Dow's business vice president for acrylics, solvents, and intermediates.

Degussa says it wants to position itself for the strong growth the company expects in the superabsorbents business. The company already had annual sales in superabsorbents of about $537 million in 2004. "The market for superabsorbents has been growing significantly in the recent past," says Gunther Wittmer, president of Degussa's superabsorber business unit.

The companies say completion of the transaction depends on regulatory approvals; they hope the deal will close in the first half of 2006.

Separately, Degussa says that after considering all of the offers it has received for its construction chemicals business, it is entering into exclusive negotiations with BASF. The unit has annual sales of about $2.2 billion.

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