EU to BASF: Divest PAG


The European Commission on Dec. 1 approved BASFs acquisition of Cognis, but will require BASF to divest plants in Hythe, England, that manufacture polyalkylene glycols and PAG-based lubricants. The transaction is expected to close in the first half of this month.

BASF will grant intellectual property rights that will allow the buyer to produce polyalkylene glycols and PAG-based lubricants, which are mainly used in industrial formulations and household products, exclusively for BASF for a transition period and then in its own right, the commission stated. The commissions investigation showed that the divested businesses would be viable and that the commitments would resolve all identified competition concerns.

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BASF, headquartered in Ludwigshafen, Germany, will receive PAG and PAG-based lubricants manufactured at the Hythe site through a toll manufacturing agreement.

The activities at the Hythe plant will continue under a hold separate manager, who will ensure that these businesses will remain separate from BASF and ensure the value to the new owner is retained, BASF spokeswoman Jennifer Moore-Braun told Lube Report. Noting that BASF doesnt disclose the number of employees at individual plants, Moore-Braun said about 150 people work at the site in total.

In June 2010, Dusseldorf, Germany-based Cognis signed a sale and purchase agreement to sell 100 percent of the shares in Cognis Holding GmbH to BASF SE for 700 million in cash. Including debt and pension obligations, the transaction was valued at 3.1 billion. Since November 2001, Cognis Group was owned by a consortium of private equity funds advised by Permira, Goldman Sachs and SV Life Sciences.

Before the acquisition, BASF had 105,000 employees and close to 385 production sites, while Cognis had about 5,600 employees across 62 locations in 30 countries.

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