In a significant move within the industrial sector, private equity firm Carlyle and the Qatar Investment Authority (QIA) have agreed to acquire BASF’s coatings business for a substantial €7.7 billion. This transaction represents one of the largest private equity-led industrial deals in Europe this year, signaling a major shift for the German chemicals giant.
Key Takeaways
- BASF will receive approximately €5.8 billion in pre-tax cash proceeds and retain a 40% equity stake in the newly formed standalone company.
- The deal is anticipated to conclude next year, pending regulatory approvals.
- Major law firms Milbank, Latham & Watkins, and Freshfields Bruckhaus Dering advised on the transaction.
Deal Structure and Financials
The agreement sees BASF divesting its coatings division to Carlyle and QIA. Under the terms of the sale, BASF is set to gain around €5.8 billion in cash before taxes. Crucially, BASF will maintain a 40% ownership in the newly established independent entity, indicating a continued strategic interest.
Strategic Rationale for BASF
This divestment aligns with BASF’s broader strategy to concentrate on businesses that are deeply integrated within its global chemical production network. The sale of the coatings business, combined with the earlier sale of its decorative paints arm to Sherwin-Williams, values BASF’s total coatings operations at approximately €8.7 billion, including debt.
Legal and Financial Advisors
The transaction involved extensive legal counsel from prominent firms. Milbank advised Carlyle on the acquisition, BASF’s reinvestment, and the partnership with QIA. Latham & Watkins represented Carlyle on various aspects, including the carve-out, debt financing, and regulatory matters. Freshfields Bruckhaus Dering acted as legal advisor to BASF.
Financial institutions, including Citi and Goldman Sachs, are reportedly arranging a debt financing package exceeding €4 billion to support the acquisition. The deal is expected to be finalized in the coming year, subject to the necessary regulatory clearances.
