In a transaction involving two of Europe’s biggest chemical makers, BASF has agreed to acquire Solvay’s global nylon business for $1.9 billion.
The business is the world’s third-largest maker of nylon engineering plastics, with annual sales of $1.6 billion and pretax profits of about $240 million. It predominantly makes nylon 6,6, a polymer with applications in automotive, electronics, and other markets.
BASF says the purchase will give it greater access to growth markets in South America and Asia. Additionally, the deal will strengthen BASF’s nylon 6,6 supply chain by bringing the key raw material adiponitrile, which BASF now purchases. The two firms plan to complete the sale in the third quarter of 2018.
Solvay acquired the nylon business in 2011 as part of its $4.8 billion purchase of the French chemicals firm Rhodia. It employs approximately 2,400 people, half of whom are located in France. It has 12 production sites, four R&D hubs, and 10 technical support centers.
Solvay’s move mirrors those of Honeywell and Solutia, both of which exited the nylon sector in the past few years.
Nylon has become more profitable recently, Solvay says. Nevertheless, the firm is ditching it as part of a long-term strategy to focus on higher-value specialty chemicals. The divestment “marks a tipping point in the profound transformation journey we began four years ago,” says Solvay CEO Jean-Pierre Clamadieu.
Meanwhile, Solvay says it has no plans to divest its hydrogen peroxide or soda ash operations, commodity businesses that in 2016 generated total sales of about $2.5 billion. These businesses have scale and technological advantages and generate cash with little exposure to economic cycles, says Solvay board member Pascal Juery.