Belgian chemicals group Solvay is selling its polyamide assets in Europe to Germany's Domo Chemicals, a move that will allow Solvay to progress with the sale of its global nylon business to BASF.
Domo will acquire Solvay's PA6.6 business in Europe, which includes engineering plastics operations in France and Poland, high performance fibres operations in France and polymer and intermediates operations in France and Poland. It also involves a newly-created joint venture between BASF and Domo in France for the production of adipic acid.
The Solvay-Domo transaction, valued at around €300mn ($334mn) on a cash and debt-free basis, is part of the remedy package needed to allay the competition concerns raised by the European Commission regarding BASF's proposed deal with Solvay.
BASF, in turn, will acquire the global non-European PA6.6 business of Solvay, including a 50pc share in Butachimie's adipodinitrile (ADN) production. The acquisition comprises eight production sites. Solvay's three research and development centres in South Korea, China and Brazil and six technical consultation centres in Asia and the Americas will also be transferred to BASF.
The BASF-Solvay deal was first announced in September 2017 and was originally valued at €1.6bn. Its completion — previously expected in the third quarter of 2018 — was delayed after the commission carried out an in-depth investigation following concerns that the combined business might reduce competition in the supply of key inputs in the nylon production chain and lead to higher prices or less choice for European businesses and consumers.
BASF will pay €1.3bn on a cash and debt-free basis for the Solvay businesses, which generated sales of around €1bn in 2018. It will integrate the acquired assets into its monomers and performance materials divisions.
Solvay's transactions with Domo and BASF, which have a combined worth of €1.6bn, are expected to be completed by the end of 2019, subject to the final approval of relevant competition authorities.
BASF said the acquisition will allow it to "benefit from improved access to important growth markets in Asia and South America."
Domo said the Solvay assets it bought will significantly strengthen its downstream nylon-based engineering plastics business, creating a backward-integrated business with a secured supply of key raw materials. It expects the acquisition to add around €700mn in annual sales.
