BASF Buys Merck Chemical Unit

SPECIALTY CHEMICALS

Merck KGaA has found a buyer for the high-purity electronic chemicals unit it put on the block last year. BASF is purchasing the unit for $350 million.

The Merck business, which focuses on high-purity wet chemicals for semiconductor and flat-screen manufacturing, employs about 600 people and had sales in the first nine months of 2004 of roughly $200 million. With the deal, BASF will get Merck manufacturing and distribution sites in Taiwan, Malaysia, China, Singapore, France, the Netherlands, and Germany.

The deal is expected to close during the second quarter, pending regulatory clearances. Merck and BASF will jointly manage the business's Taiwanese operations until the end of the year to ensure a smooth transition at that strategic location. Merck will also manufacture electronic chemicals under contract for BASF at its Darmstadt, Germany, site.

Merck says the sale will allow it to focus on businesses such as pharmaceuticals, pigments, specialty reagents, and liquid crystals, the last being a business that serves the electronic displays sector but is not included in the transaction.

BASF is a relatively small player in electronic chemicals. Key products for the company include concentrated mineral acids. It is also the world's only supplier of hydroxylamine free base, a hard-to-make photoresist stripper. "Our customers will benefit from BASF's expertise in chemistry and production combined with Merck's experience in purification, formulation, and analysis," says Karl-Rudolf Kurtz, head of BASF's electronic materials unit.

There has been a spate of deals involving midsized electronic chemical suppliers recently. Last fall, Carlyle Group purchased Clariant's AZ Electronic Materials unit for $415 million, and Arch Chemicals sold its Microelectronics Materials business to Fuji Photo Film for $160 million.