Ineos to Buy Partner BASF’s Stake in Styrolution Venture

Ineos Group Holdings Inc. will buy full control of a styrene plastics joint venture with BASF SE (BAS) for 1.1 billion euros ($1.5 billion) in a bet it can extend a move into more-profitable products for the electronics and automotive industries.

The companies plan to complete the transaction by the end of the year, they said in a statement. Rolle, Switzerland-based Ineos had a call option to buy its German partner’s share in the partnership under an agreement reached in 2011, they said.

“Styrolution has fulfilled its promise as a globally competitive business that competes effectively with large-scale producers from Asia and the Middle East,” Ineos Chairman Jim Ratcliffe said in the statement.

Styrolution has set a goal of generating half of sales from specialty products and half from emerging markets by the end of the decade. It predicted in February that it may beat a 2020 deadline of reaching a profit margin of at least 10 percent of sales and outlined plans to set up its first ever production in China by then.

BASF rose 0.9 percent to 85.41 euros in Frankfurt as of 11:32 a.m. The Styrolution joint venture was a stop-gap solution for the Ludwigshafen, Germany-based company to exit a commoditized business with limited scope for innovation. Consumer trends moved against traditional styrene that had been used to make compact disc cases and TV shells, leading companies to engineer better performing variants.

Ineos Spending

BASF Chief Executive Officer Kurt Bock is steering the company toward more value-added products such as nutritional ingredients, high-performance plastics and cosmetic ingredients.

For Ineos, the investment highlights a return to acquisitions upon which the company is built. Ratcliffe, who formed the chemical company through a series of deals including the purchase of Innovene from BP Plc (BP/) in 2005, is betting the company can compete with Asian competitors including Chimei Materials Technology Corp. (4960) and Formosa Petrochemical Corp. (6505)

U.S. competitor Trinseo, formerly part of Dow Chemical Co. (DOW), completed an initial public offering this month that raised almost $200 million.

To contact the reporters on this story: Tom Lavell in Frankfurt at tlavell@bloomberg.net; Andrew Noel in London at anoel@bloomberg.net

To contact the editors responsible for this story: David Risser at drisser@bloomberg.net Andrew Noel, Robert Valpuesta

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