Albemarle sells Chemetall to BASF for $3.2 billion

In a move calculated to strengthen its position in the paint and coatings market, BASF has agreed to purchase Albemarle’s Chemetall metal surface treatment business for $3.2 billion. The deal, which also helps Albemarle reduce debt, is expected to close by the end of this year.

Based in Frankfurt, Germany, Chemetall earned $202 million last year on $845 million in sales of products designed to protect metals from corrosion and prepare them for painting.

BASF’s coatings business already has $3.6 billion in annual sales. Wayne T. Smith, the BASF board director responsible for the business, says Chemetall will allow the firm to further serve customers in automotive, aerospace, and coil coatings. The acquisition adds 2,500 employees, 21 production sites in 20 countries, and 10 R&D locations.

For Albemarle, the sale of Chemetall is a way to pay down debt it took on in 2015 when it purchased Rockwood Holdings for $6.2 billion. Chemetall was part of that deal, but for Albemarle the purchase was more about Rockwood’s lithium chemicals business, which is experiencing growth in the electric-vehicle battery sector.

Albemarle Chief Executive Officer Luke Kissam says the Chemetall sale will provide funds to invest in higher-priority businesses and reduce debt.

The Baton Rouge-based firm recently sold businesses in mineral flame retardants and metal sulfides that have combined sales of $300 million per year. Last year, it earmarked its fine chemistry services business, with $200 million in annual sales, for divestment, but no movement on that deal has been reported.

Credit rating agency Fitch Ratings says it expects Albemarle to allocate a “meaningful portion” of the proceeds from selling Chemetall to reducing its current debt of $3.6 billion. The agency also expects the sale to free up cash that allows Albemarle to further invest in its lithium business.