BASF is interested in acquiring Degussa’s construction chemicals division to expand its own portfolio in a high-growth market through forward integration. With the approval of its Supervisory Board BASF’s Board of Executive Directors has proposed to Degussa’s Board of Management to conduct exclusive negotiations on the possible transaction. Following a detailed review of the business case, BASF plans to make a concrete offer for Degussa’s business. BASF wishes to start the review as quickly as possible.
The global construction chemicals market is valued at around €13 billion and is attractive in view of annual growth of about 4 percent, relatively stable margins and high potential for innovation. The acquisition of Degussa’s business would give BASF rapid access to additional industrial customers and end-users.
BASF Board member Dr. Andreas Kreimeyer considers the combination of BASF’s expertise in chemistry and the extensive applications know-how of Degussa’s construction chemicals division to be an excellent means of expanding BASF’s business: “As market and technology leader and the largest supplier of construction chemical products, Degussa is an important global partner to the construction industry. Together with our own activities, we can open up new growth potential. We are interested in this business because of its global reach, its presence in important growth markets, in particular North America and Asia, and because of the high level of knowledge and innovativeness of its employees.”
According to Degussa’s annual report, the company’s construction chemicals division posted sales of approximately €1.8 billion and an EBIT of €201 million in fiscal 2004 with a global workforce of about 7,400 employees. The division markets over 40,000 products in the Americas, Europe and Asia Pacific, and is organized in two segments – Admixture Systems and Construction Systems. More than 100 new products are launched every year.
The business units in the Admixture Systems segment offer products and system solutions for the concrete industry. Customers include manufacturers of ready-mix and precast concrete and concrete products as well as contractors engaged in paving, mining and underground construction. The technologies used in Admixture Systems' products ensure optimal concrete properties.
The business units in the Construction Systems segment are active in the areas of building systems, flooring applications, coatings and façades and expansion joints. Customers include building trade businesses, fabricators, building contractors and dealers specializing in concrete and masonry renovation, waterproofing, sealing, adhesive systems, tile fixing, performance flooring, coatings and façades, exterior insulation and expansion joints.