BASF Said to Be in Talks to Sell Coatings Unit to Akzoby and
Deal may be announced as soon as this month; no final decision
BASF's coil-coatings business valued at about $450 million
BASF SE is in talks to sell a metal-coatings business to Akzo Nobel NV in a transaction that could be valued at about 400 million euros ($450 million), according to people with knowledge of the situation.
An agreement could be reached as early as this month if negotiations over the coil-coatings unit proceed successfully, said the people, who asked not to be identified because the matter is private. PPG Industries Inc. also expressed an interest in the asset, said the people. No final decision has been made and any talks could still fail.
Representatives of Akzo and BASF declined to comment. PPG’s Ken Armistead said the U.S. company doesn’t comment on “market rumors or speculation.” It’s always looking for opportunities to enhance its product portfolio, he added.
BASF Chief Executive Officer Kurt Bock is selling smaller, peripheral businesses to help streamline the company amid low oil prices and heightened competition from chemical makers in the U.S., the Middle East and Asia. BASF claims a top-three spot in the market for steel and aluminum coil coatings, used widely in industries spanning car parts to refrigerators.
Akzo Nobel CEO Ton Buechner has said he’s interested in making acquisitions and pushing for growth again after years of cutting costs and selling units to bring profitability in line with peers including PPG. The Amsterdam-based paint maker struggled with volatile earnings in the years following its 2008 purchase of Imperial Chemical Industries Ltd. for about $17 billion that created a conglomerate spanning Dulux paint, commodities like chlorine, and specialty chemicals.
Akzo shares fell 1.4 percent to 52.65 euros as of 2:56 p.m. local time in Amsterdam, while BASF was 0.9 percent higher at 57.94 euros in Frankfurt.
Revenue at performance coatings increased by 5 percent in the latest quarter, compared with 1 percent growth in Akzo Nobel’s decorative paint business, according to financial results published Wednesday.
Coil coatings is a highly automated business whereby metal sheets are cleaned, primed, coated and cured for processing and shaping into parts. Akzo Nobel already has sites manufacturing metal treatments across Europe. The Dutch company’s coatings division was the best-performing in terms of sales in the fourth quarter and 2015.
Valspar Corp. announced its own acquisition of a European coil coatings company on Wednesday, intensifying competition in Akzo Nobel’s home region in Europe. The Minneapolis-based company acquired Turin-based ISVA Vernici to provide a platform for accessing the southern European market, as well as customers in North Africa and the Gulf region. Financial terms weren’t disclosed.