BASF will significantly increase its nylon resin and materials-technology portfolio by acquiring Honey-well International’s worldwide engineering thermoplastics business, which is almost entirely nylon 6.
BASF, Ludwigshafen, Germany, announced the deal on Jan. 14. The company disclosed that it had signed agreements for two transactions with Honeywell, Morris Township, NJ. One is for the acquisition of the engineering thermoplastics (ETP) business for $170 million. The other is to sell its worldwide nylon fibers business to Honeywell for $80 million.
The deals should close before July, subject to regulatory approval. They will take BASF out of fibers. BASF’s ETP business includes Ultramid nylon, Ultradur polybutylene terephthalate, Ultrason E polyethersulfone, Ultrason S polysulfone, and Ultraform acetal copolymer. BASF also supplies polyurethanes and styrenics.
The agreement covers polymerization and compounding facilities, R&D assets, and sales and technical service locations in North America, Europe, and Asia.
Honeywell nylons are used for automotive, packaging, furniture, building and construction, and power tools (all major markets for BASF). The portfolio includes Capron nylon 6 (Honeywell sells nylon 66 as well, but does not make it), Petra post-consumer PET, and Nypel post-consumer nylon 6, for technical applications. All are included in the deal.
Not included are Aegis nylon barrier resins, a business associated with Honeywell’s nylon films unit, which is not part of the sale. Honeywell is also not selling its reactor-produced nylon-based nanocomposites aimed at barrier films.
Honeywell has four polymer trains in Petersburg, VA; one will be sold to BASF, but be operated by Honeywell. BASF also gets compounding capacity there and in Sparta, tn. Honeywell did not release numbers, but some consultants put the company’s capacity for nylon resins (excluding fibers) in Petersburg at 190,000 tonnes (418 million lb)/yr, up recently from 120,000 tonnes.
A shuttered chemical recycling plant for nylons, operated by the Evergreen Nylon Recycling LLC joint venture between Honeywell and DSM, is not included in the deal.
Overseas, BASF will get all 30,000 tonnes/yr of polymer capacity at Honeywell’s Rudolstadt, Germany, plant, along with the compounding operation there. BASF also gets compounding capacity in Ansan, South Korea. No figures were disclosed for compounding capacity at either location.
BASF has 225,000 tonnes/yr of nylon 6 capacity between the U.S. and Europe, and 60,000 tonnes/yr of nylon 66 capacity in Europe.
BASF is selling nylon 6 fiber plants, R&D facilities, and sales offices in North America, along with BASF Hua Yuan Nylon Co. Ltd., in Shanghai, China. Not included in the sale are BASF’s nylon and nylon intermediates plants.
Honeywell’s ETP business had sales of approximately $350 million in 2001. Honeywell is the largest nylon 6 producer in the U.S. and the second-largest supplier of nylon after DuPont. The combined ETP businesses of Honeywell and BASF would have had pro-forma sales of almost $2 billion in 2001.
Industry reaction to the deal seems generally positive. “BASF stands to benefit a lot,” says Balaji B. Singh, president of Chemical Market Resources Inc., Houston, TX. He notes that BASF will almost double its U.S. nylon market share with the acquisition and be in a much stronger position to challenge industry leader DuPont. Singh adds that BASF may also gain key technologies, like that for high-heat nylons, from Honeywell.
Robert Eller, president of Robert Eller Assoc. Inc., Akron, OH, says the deal will benefit BASF in automotive. “The nylon resin swap will strengthen BASF’s already strong position in the growing automotive nylon sectors that account for 300 million lb of demand in Nafta alone.” These applications include underhood parts and mirrors. If diesel vehicles increase, he adds, nylon demand could exceed 400 million lb in 2007.
One observer, however, questioned the long-term benefit of the deal for Honeywell. Noting that ETP growth averages 7 to 8%/yr, he says the nylon fibers market is stagnant and shows little sign of growth.