BASF has agreed the sale of its pigments business for €1.15bn to Japanese firm DIC, the German major said on Thursday.

The announcement follows financial services company Moody’s reviewing BASF’s credit rating as the producer slashed its 2019 earnings forecast in the wake of a weak first half.

The company's pigments segment generated €1bn in sales in 2018 and has 2,600 employees globally. The deal, which is pending approval of competition authorities, is expected to be finalised in the fourth quarter of 2020.

The timeline for sales of BASF's non-core business segments has been identified as a key factor in determining how ratings agents will assess it.

In line with this, BASF has also been active in looking to sell its construction chemical business by the end of the fourth quarter of 2019, but there has been nothing to suggest any movement on this front.

BASF board of executive directors and Industrial Solutions lead Markus Kamieth said: “We have achieved our goal to find an owner who considers pigments a core strategic business.

“DIC pursues ambitious growth plans and has announced to further develop the business in the coming years. We are convinced that the pigments business will be able to unfold its full potential within DIC.”

The Japanese specialty chemicals company generated sales worth €6.8bn in 2018 but has set a goal of reaching around €8bn in sales by 2025, according to DIC president and CEO Kaoru Ino.

He said: “In this context, BASF’s pigments portfolio is an important strategic addition in meeting our goals more expeditiously. It will allow us to expand our position as one of the leading pigment suppliers globally and offer our customers even more versatile solutions.”

Myron Petruch, CEO of DIC’s pigment segment Sun Chemical, said the acquisition would enable it to become more innovative.

"By combining our businesses, DIC/Sun confirms the ambition to be one of the most innovative pigment suppliers globally.”

Source: ICIS