AkzoNobel's Divestment of National Starch Completed

AkzoNobel has finalised the $1.3bn sale of its National Starch business to Corn Products International. The transaction was announced on June 21, 2010.

"National Starch was taken over by AkzoNobel as part of its acquisition of ICI in 2008, but did not offer sufficient opportunity to create value within the company's transformed portfolio."

Corn Products International is one of the world's largest suppliers of food ingredients and industrial products derived from the wet milling and processing of starch-based materials and has its HQ in Westchester, Illinois, USA.

There will be further consolidation of the starch industry as European subsidies disappear.

Kemira closes Blankophor GmbH & Co. KG (German Catec GmbH)

Kemira Oyj has on September 30, 2010, closed Blankophor GmbH & Co. KG (German Catec GmbH) following the deal announced on June 23, 2010.

Kemira sold its global Fluorescent Whitening Agents (FWAs) business to Blankophor. The parties have agreed not to disclose the transaction price.

The traditional European, high-cost manufacturers of optical brightening agents (OBA) or FWAs continue to struggle as these commodities are easy to source form Indian and Chinese producers at similar quality but much lower price.

Kemira sells its global FWA business

Reported in the press this morning:

Kemira Oyj and German Catec GmbH financially supported by Fengler Beteiligungs GmbH have signed a contract, according to which Kemira sells its global Fluorescent Whitening Agents (FWAs) business to Catec. FWAs improve the whiteness and brightness of paper. The deal covers a production plant in Leverkusen, Germany, the global FWA sales network and the associated support functions. The FWA business and its staff of about 100 persons will be transferred to the new owner once the companies have closed the transaction in August 2010.

The transaction does not have any significant impact on Kemira's financial figures, and the parties have agreed not to disclose the transaction price.

"Kemira is focusing according to its strategy on products and services that enhance the water quality and quantity management in the water intensive industries such as pulp and paper industry. Exiting FWA business is in line with our strategy to enhance the product lines which are common for all our segments and on which we are building our competitiveness", states Petri Helsky, head of Paper segment.

FWAs or OBAs are widely used in the paper industry for producing white paper. A low-margin, commodity business where the major companies, BASF (Ciba), Clariant and Kemira have struggled to compete against quality market entrants from China and India.

Clariant a target for Solvay's cash?

After Solvay sold its drug unit, Abbott, on Monday for EUR4.5 billion, speculation has started as to what Solvay will spend the money on. In a Reuters article, it was pointed out that the ailing Clariant could be a target.

Clariant's share price rose by as much as 4% on the back of the speculation, but many analysts remain sceptical.

DyStar files for Bankruptcy

Following earlier rumours, it has now been confirmed that DyStar Textilfarben GmbH, DyStar Textilfarben GmbH & Co Germany and DyStar Holdings have all filed an insolvency petition with the local court in Frankfurt for the company's operations in Germany.

The insolvency petition includes the company's sites in Frankfurt, Leverkusen, Brunsbuttel, Geretsried and Ludwigshafen which in total employ around 1,300 people.

It has been stated that the insolvency filing was necessary after DyStar exhausted alternative solutions to their liquidity problems.

DyStar hold a wealth of dyes technology and it will be interesting to see where it all ends up.

DyStar to file for bankruptcy

The rumour mill has picked up that DyStar will file for bankruptcy. The company's market focus is on textiles and leather and not the paper industry.

DyStar is a conglomeration of textile dyes businesses - founded in 1995 as an amalgamation of the Bayer, Hoechst and Mitsubishi textile dye businesses, they later acquired the BASF, Mitsui, Zeneca, Colour Solutions and Yorkshire Americas businesses. In 2004 DyStar was acquired by the private equity company, Platinum Equity and is recognised as a leader in the textile and leather markets

More news is expected, but the complex collection of companies in a rapidly changing market may have proved too difficult for the private equity company in the 'credit crunch' era. There will surely be some interest from the surviving market players in purchasing some or all of DyStar; however, it is a good opportunity to take capacity out of the ailing European market.

Clariant sells USA silicone business

Clariant has sold its silicone business based in Gainesville, Florida to SiVance LLC, an affiliate of GenNx360 Capital Partners, a private equity comany. This has little impact on Clariant's paper chemical business.

BASF Blitz Ciba - 3,700 jobs to go in an EU approved acquisition.

In a not too surprising move, BASF announced that it will further its own agenda and slash the newly-acquired Ciba Specialty Chemicals organisation. In the rather disjointed announcement (lost in the translation, if you want to be kind), BASF announced:

• 23 of the sites acquired with Ciba are under review (management or poor PR speak for, 'Will be shut')
• Synergies of at least EUR400 million per year, in other words, site closures and the planned loss of 3,700 jobs - synergies is a rater out dated word!
• Fair and transparent decisions - a PR strip line which has no credibility whatsoever. BASF decide and you will obey! It bewilders us why large companies continue with their old fashioned PR statements - no one believes that the decisions are fair or transparent! We planned it, you do it and those we want will be employed as long as you support our decisions! Too cruel? Not according to our feedback.

Perhaps, for the paper chemicals business there are some glimmers of commitment. The centre for the business will be in Basel (a tax dodge), but feedback from the people based in Ludwigshafen is far from positive - many will not move to Switzerland and why should the heart of the business be relocated to save taxes - the EU needs to take a stand against the Swiss and support its EU members. Clariant, Hercules, BASF .......... how many more will dodge paying EU taxes?

In a straw poll of the paper industry there is a decided unease regarding the merger and a general belief now that the trend to consolidation ('one stop shop') has had its day and the opportunities for India, China and smaller companies is gaining momentum. The growth in the importation of paper chemicals into the EU bears testament to this view.

Keep posted as we gather more information regarding exactly what BASF intends to do with Ciba ............. so far the message is that they are taking a supplier out of the market. The strategy will not be easy to implement!

RISI now 100% owned by UBM

United Business Media completed its acquisition of RISI, the news and information provider for the forest industries. Times are tough in the forest products industry and RISI have struggled to grow their service offering. For UBM this may be an opportunity to invest in the future although some rationalisation and streamlining of the RISI operation is expected.

UBM paid $14.3 million.

Clariant North America acquires defoamer business

Three months ago, Clariant USA fomed an exclusive strategic alliance to service the world-wide foam control market, they have now announced that they will acquire XL Performance Chemicals from Fibro Chem LLC.  The terms of the deal have not been disclosed.

The aquisition has been made by Clariant's Functional Chemicals Division and although claims are made for Clariant's ability to now service the global foam control market, the reality is that any impact of the acquisition is likley to be in the Functional Chemicals Division and North America - Clariant does not have a good track record of working across divisional 'silos' or in exploting regional sucesses world-wide.

In the paper business Clariant does not have a presence or reputation in the process chemicals market so would be at a distinct disadvantage were it to try to use its current business model to exploit the defoamer market.  Clariant essentially has two functional paper product ranges - speciality dyes and commodity fluorescent whitening agents.  

The future manufacture of the acquired foam control agent products will continue in Greenville SC, USA under a toll manufacturing agreement.  As the business develops, Clariant has the option to transfer production world-wide and use its own facilities.

Clariant's share price has continued to edge upwards from the rock bottom CHF3.71 on March the 9th to just above CHF7 today - a good increase for the short-term trader but far short of the CHF20 range in mid 2007.  As we have stated before, this is a watershed year for Clariant.

BASF Roadshow - 'The Chemical Company' pitch to investors

BASF has been on the road with a story to keep or entice future investors.  

Unde the title, 'Tackling the challeneges ahead", details of BASF's current performance and outlook are made.  In the last slide, the integration of the Ciba businesses into the BASF structure, effective 1 April, 2009,  is shown.

BASF start to implement the 'Plan' as key people in Ciba are replaced

BASF has started to implement its 'Plan' for swallowing Ciba.  As one of many moves, BASF announced today that it had appointed its Michael Heinz (45) as the new CEO of Ciba.  In addition, Heinz has the role of integrating Ciba into BASF.

Ciba's current CEO, Brendan Cummins, has been given an 'advisory capacity for the next few months.'

Federal Trade Commission USA requires BASF sell off some pigment business to receive go ahead for Ciba acquisition

The chemical  giant BASF has been instructed inder the terms of the US FTC consent order, to sell all assets, including intellectual property, to two pigments, bismuth vanadate and indanthrone blue, to a Commission-approved buyer within 6 months.  A mere drop in the ocean for a lumbering giant like BASF.

With both the European and USA monopolies regulators sanctioning the go-ahead for BASF to acquire Ciba, the re-organisation of the combined paper chemicals businesses will begin.  As a Ciba employee stated recently, 'We just wait for BASF to order us what to do.  They have made their plans and we will not be consulted.'

EU asks BASF to offload some business to comply with competition concerns - a good deal for BASF

The European Comission has concluded its look at the acquisition of Ciba by BASF and ruled that there are concerns in a number of market segments:

• DMA3 (dimethylaminoethyl acrylate - a chemical intermediate)
• Synthetic dry strength resins (used in the paper industry) 
• Bismuth vanadate (a pigment)
• Indanthrone blue (a pigment)
• Styrene acrylic (used as a glue for paper applications) - BASF will, of course remain a dominant producer of styre acrylate emulsion polymers
• HALS - hindered amine light stabilisers (used in plastics)
• UV filters for skin care products

To resolve the competition concerns, BASF and the EU have agreed that the following will be divested:

• BASF's DMA3 production assets in Ludwigshafen, Germany
• Ciba's entire EEA (Ethylene ethyl acrylate) synthetic dry strength agent business
• Ciba's global bismuth vanadate business
• Transfer Ciba's ' know-how of the finishing line', all supply contracts acustomer lists and inventories for the indanthrone blue
• Ciba's styrene acrylate business (and polyvinyl acetate, acrylic acid or acrylate) in the European Economic Area at Kaipianen, Finland
• HALS - Ciba's entire 'Chimassorb 119 FL' business, including the Chimassorb 119 FL production assets, releveant know-how and customer lists
• UV filters - BASF will conclude a UV Filter Licence Agreement, giving third party access to the technology behind Tinosorb S

Further information is available from the European Commission web site if one likes reading and can understand the EU mumbo jumbo.

This list of divestments is very light and a great deal for BASF who will continue to increase their dominance in a number of market segments - especially paper chemicals.  It raises the question as to whether this type of deal would have been allowed if the current poor economic environment had not existed.  In the last 6 months there have been a number of attempts to protect industries in Europe and past competition rules seem to have been relaxed.

BASF stike a very good deal with EU in meeting competition concerns over Ciba acquisition.

BASF has reached agreement with the EU Union anti-trust approval board and found a way forward to complete its acquisition of Ciba Specialty Chemicals.

Last September, BASF agreed to buy Ciba for CHF6.1 billion, but the EU regulators had concerns over the distortion of competition in products used in paper, plastics and skin care.  BASF has agreed to sell off some of these businesses in order to win regulatory approval.

The details will become more clear, but the staement was that BASF, '.... will sell chemical plants in Ludwigshafen and Ciba units making synthetic dry strength agents for the European paper industry; the pigment, bismuth vanadate, sold globally; and a Finnish-based business making glue for the paper industry.'  The statements were made to confuse and not give a transparent view of what was being sold and to whom.  It will all come out within the next few days - it just takes a couple of phone calls to Ciba!

Furthermore, the 'statement' goes on to say that, ' ..... Ciba's know-how for making and selling the pigment indathrone blue will be transferred, and aunit making light-stabilisers for plastics will be divested.'  It will also strike a licensing deal to allow rivals to use an ultraviolet filter Ciba developed for skin care.

On the face of it, BASF has made a good deal with the EU and will now find themselves in a very dominant position in the paper chemicals industry.

CIBN (Zurich) rose 30 centimes to CHF48.30 and BASF (Frankfurt) rose 84 euro cents to EUR24.26.

Later views:

Cosmeticsdesign.com

BASF offer Cocessions in EU review of bid to acquire Ciba

In a Bloomberg report today, BASF has offered various undisclosed concessions in discussions with the EU regarding the acquisition of Ciba Specialty Chemicals.

BASF Start to Prepare Organisation for Swallowing Ciba

BASF has announced that it will optimise its structure and lay the foundation for the rapid integration of Ciba's businesses.  Sounds ominous!

The main changes will be in the 'Performance Products segment', and will take effect on the 1st April, 2009, assuming the anti-trust authorities approve the merger.  From the end of the first quarter, the 'Discovery Phase', will involve a two month analysis of the joint businesses with the integration expected to start in the second half of 2009.  Despite the co-operative tone of the announcement, BASF is not known for consultation and conciliation and it is more than likley that the bulk of the BASF plan will already have been decided and there will be a quick implementation and integration of Ciba.

BASF's performance products 'segment' consists of:

• Acrylics and Dispersions
• Care Chemicals
• Performance Chemicals
• Paper Chemicals (a new devision from 1st April) - this division will initially consist of BASF's business with paper chemicals, binders and kaolin minerals.  After the so-called 'Discovery Phase', Ciba's paper chemicals activities will be integrated into this division.  Dr Ehrenfried (Fred) Baumgartner (56) will move from being head of BASF's Inorganics Divison to head up Paper Chemicals.  BASF will then become the largest supplier of chemicals to the world-wide paper industry.  The paper industry waits with interest to understand what The Chemical Company's definition is of a 'market-oriented positioning' for the combined businesses'!  

In the same announcement, BASF has indicated its intention to 'review its strategic options for leather and textile chemicals' - this is probably management code for exiting these businesses.

Dow Chemical back out of Rohm and Haas acquisition.

The Dow Chemical Company has confirmed that the acquisition of Rohm and Haas has stalled and will not take place on the 27th January, 2007 as planned.  This comes soon after the announcement by Dow that they had received FTC clearance to go ahead with the acquisition.

The usual econnomic reasons have been given but the key event for Dow has been the failure in December to complete a deal with Petrochemicals Industries Kuwait (PIC) and form the K-Dow JV.  There is still an interest from Dow to make the acquisition, but no clear position regarding when and if the financial situation will improve sufficiently.

Can you trust market data?

It was interesting to read a recent advert for a study by Frost & Sullivan.  The title is, ' European Pulp & Paper Chemicals - is Consolidation the Response to a Mature Market?  What is striking is the market data shown for the European paper chemicals industry - there are only three significant players in a chart that is described as, '..... the market shares of the leading companies in the European pulp and paper manufacturing process chemicals market in 2008.

The segmentation of the pulp and paper chemicals market shows a complete lack of market knowledge and then to suggest that Kemira, Eka Chmeicals and Solvay have 85% of the process chemicals market is claptrap.  Further comments could be made on the report but it it not worth the effort.......... when the data are suspect, how can one trust the conclusions.  

Akzo Nobel acquire chlo-alkali business in Germany

Akzo Nobel announced that it has completed the acquisition of LII Europe, a business based in the old Hoechst Industrial Park near Frankfurt, Germany.  The business and assets are focussed on chlorine and caustic and other related chemicals.