BRUSSELS/FRANKFURT (Reuters) - The European Commission said on Friday it had approved the acquisition by German chemical company BASF (BASFn.DE) of the nylon business of Belgian rival Solvay (SOLB.BR) subject to conditions.
The EU antitrust regulator said Solvay needed to divest its facilities in France, Poland and Spain to a single buyer to guarantee competition in Europe.
It also required the creation of a production joint venture in France between the merged entity and the buyer of the assets for the production of adipic acid.
The companies committed to granting the future owner of the assets long-term supply of adiponitrile (ADN), a key ingredient for nylon, the EU Commission said. “Our decision will allow for the creation of a significant European player in this market because the commitments offered by BASF and Solvay ensure that the merger will not lead to higher prices or less choice for European businesses,” the EU antitrust commissioner Margrethe Vestager said in a statement.
BASF in September 2017 here agreed to buy Solvay's nylon business for 1.6 billion euros ($1.8 billion) to boost its engineering plastics portfolio and improve access to growth markets in Asia and South America.
Nylon has various uses, including in heat-resistant engineering plastics, textiles, tube fittings, cooling fans and engine air ducts.
Reuters last week cited people close to the matter as saying BASF was marketing the assets to companies that also took part in the 2017 auction, including South Korea’s SK Innovation (096770.KS), China’s KingFa (600143.SS), and private equity group SK Capital, which owns peer Ascend.
The assets, with estimated core earnings of about 60 million euros and an expected value including debt of 7-8 times that, also include engineering plastics that have whet the appetite of peers such as Lanxess (LXSG.DE), according to the Reuters report.
BASF said on Friday that talks with prospective buyers were ongoing, declining to comment further.
A company spokesman said the EU review was the biggest regulatory hurdle to clear and that only Chinese authorities would have yet to decide over the deal, which BASF aims to wrap up during the second half of they year.
Reporting by Francesco Guarascio and Ludwig Burger; Editing by Alastair Macdonald and Elaine Hardcastle