BASF Opts Out of Leather-Chemical Mergers With Asia Refocus

BASF SE (BAS) said it will slim its leather and textile chemicals unit and focus on the most profitable automotive and printing areas, opting out of a wave of consolidation in the industry led by Clariant AG for now.

About 65 jobs will be cut worldwide, including 29 at BASF’s Ludwigshafen, Germany-based headquarters and other positions elsewhere in Europe and South America, BASF said today. By contrast, about 23 jobs will be added in growth markets such as China, India and Turkey, BASF said.

The move comes at a time when Clariant’s decision to sell its leather-chemicals business is expected to spark more deals in the $4 billion industry. The European industry --dominated by a handful of companies including Germany’s Lanxess AG (LXS) and Dutch Stahl Holdings -- has suffered as Asian rivals added capacity driven by local demand for luxury bags, shoes and upholstery. TFL has been put up for sale by creditors.

“We are re-shaping our business setup to strengthen our long-term ability to compete in a rapidly changing market environment,” Francois Desne, a senior vice president at the unit, said in a statement. “BASF strives to remain the preferred partner of the leather and textile industries.”

The leather-chemical business will in future concentrate on the auto and premium segments while textile chemicals will focus on printing and finishing, BASF said. Research and development activities for the businesses will move to Shanghai.

Clariant (CLN) previously tried to sell its unit in 2008, and Lanxess and BASF had discussed combining their leather-chemicals assets, people familiar with the matter said last month.

To contact the reporter on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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