On December 21, local time, BASF Group announced that it would sell its construction chemicals business to the U.S. private equity firm LoneStar for 3.17 billion euros (approximately RMB 24.6 billion). The transaction will be completed on the third day of 2020. Quarter completed.
Currently, BASF’s construction chemicals business employs 7,000 employees and in 2018 had sales of approximately With 2.5 billion euros, it is the world’s largest manufacturer of concrete chemical additives. Its representative project is the world’s largest railway tunnel, the Lötschberg Tunnel in Switzerland.
As early as last fall, BASF CEO Bruder Mueller discussed the coordination effect between the chemical building materials business and other business areas. It was announced that the business would be divested on the grounds that it was not obvious and the profitability did not meet expectations.
At that time, there were reports that building materials manufacturer Standard Industries and several private equity groups were competing for the construction chemicals business that BASF was selling. It is reported that in order to become a bidder under the name of BASF, the “entry fee” must be at least 3 billion euros (approximately RMB 23.2 billion) to be eligible to enter due diligence and final quotation.
Regarding this acquisition, Donald Quintin, President of Lone Star Europe, said: BASF’s construction chemicals business fits well with Lone Star’s investment portfolio and it complements Lone Star’s investment portfolio. In its investment in the building materials industry, Lone Star places high value on the industry-wide recognized knowledge and capabilities of BASF’s construction chemicals experts, backed by a proven track record of innovative products and a compelling R&D pipeline. Lone Star looks forward to joint pursuits A growth-oriented approach to business.
It is reported that the signing of the agreement takes immediate effect for BASF Group’s reports.
Going back to January 1, 2019, sales and earnings of the Construction Chemicals segment are no longer included in sales, EBITDA and EBIT before special items of the BASF Group.
The figures for the previous year will be restated accordingly (restated sales of BASF Group in 2018: 60.2 billion euros; restated EBITDA in 2018: 8.97 billion euros; special items in 2018 Previous EBIT restatement: €6.281 billion). Prior to closing, the proceeds will be included as a separate item (“income after tax from discontinued operations”) in the after-tax income of the BASF Group.
BASF acquired the construction chemicals business from Degussa in 2006 for 2.7 billion euros (including debt). Since the acquisition, the unit has barely grown and profits have increased. Not big either.
Relevant industry analysts said that the unit’s business model of providing services to a large number of small and medium-sized builders goes against BASF’s focus on large industrial customers.
Even leading international companies like BASF have begun to sell factories, and the situation of other chemical plants is unimaginable!
Starting this year, many heavyweight companies have announced significant layoffs and reduced business scale!
Chemical giant BASF announced that it is considering laying off 6,000 employees worldwide;
American chemical giant 3M announced that it will lay off 6,000 employees worldwide; 2,000 people;
Pfizer Pharmaceuticals announced that in order to reduce employee costs, it will close two factories and lay off about 1,700 employees;
The American pharmaceutical company Eli Lilly announced that it will eliminate about 250 jobs at a factory in Strasbourg, eastern France, thereby reducing wage expenses at the factory;
Chemical giant PPG announced 1,100 layoffs worldwide;
German pharmaceutical Bayer announced 12,000 layoffs, including 4,500 layoffs in Germany;
Covestro expects to lay off 900 employees by 2021;
Evonik plans to lay off 1,000 employees by 2020;
AkzoNobel lays off 1,900 employees…
Not only that, the giant’s performance is also declining: Dow Chemical’s third-quarter net income fell 67% year-on-year , Saudi Basic Industries’ third-quarter net profit fell 86%; Huntsman’s third-quarter performance fell sharply, and full-year profits may drop by as much as 20%; Covestro’s net income fell to 147 million euros, a year-on-year decrease of -70.4%; Ineos Net profit fell 20% year-on-year in the third quarter.
Giants are often the vane of an industry. The future trend of an industry is closely related to the actions of the industry’s vanguard. Judging from the recent actions of giants, one thing is clear: the market downturn has directly affected the performance of major giants. Layoffs, sales of businesses, and resignations are not strategies so much as survival with a broken arm.
Even chemical giants have to increase revenue and reduce expenditure to promote economic growth. It can be seen how complex and difficult the current market situation is, and it is difficult for the giants to cope with it, not to mention how difficult it is for domestic chemical companies to face production suspensions and production restrictions due to environmental protection factors and various safety inspections!
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