BASF Sets Major Expansions in Superabsorbents, Acrylic Acid
"With these measures, we are considerably strengthening our value-added chain based on acrylic acid within BASF's Verbund," says BASF Dispersions Div. chief Josef F. Kohnle. "We are taking a big step forward." The acquisition not only bolsters BASF's SAP business, but also strengthens its market position in acrylic acid.
"As the only absorbent polymer producer non-integrated in the manufacture of acrylic acid, the primary raw material, we were potentially at a competitive disadvantage," explains Amcol chairman/CEO John Hughes.
"In order to remain competitive, we were facing significant investment decisions to expand globally and to become vertically integrated into the manufacture of acrylic acid. BASF approached us during this deliberation period, and we concluded that shareholder value was better served by the sale of the business."
BASF plans to use the business as an outlet for its acrylic acid capacity. Its capacity will swell to more than 1 million mt/yr with its introduction of a new, proprietary high-performance catalyst.
SAPs, which are used primarily in diapers, adult incontinence products, and feminine hygiene products, are growing by about 7% annually, says BASF. It also notes that use is largely independent of economic cycles.
Chemdal
BASF will acquire the worldwide superabsorbent business of Chemdal International Corp. from Amcol International Corp. (Arlington Heights, IL) for $656.5 million. The companies plan to close the transaction during the first quarter of 2000. Amcol will make a cash distribution of $14.00-14.50/share to its shareholders.
With 1998 global sales of $220 million, Chemdal ranks among the world's largest SAP producers. It has just under 400 employees and operates production plants in Aberdeen, MS, and Birkenhead, UK. When a third plant in Rayong, Thailand, comes on stream at the end of 2000, it will lift Chemdal SAP capacity to 160,000 mt/yr.
The acquisition greatly expands BASF's market presence. It has 230 employees and operates 140,000 mt/yr of capacity in Europe and the United States.
"The superabsorbers business of Chemdal fits in excellently with our portfolio. The plants are state-of-the-art and the company is an established supplier in Europe, North America and South America," says Kohnle.
New SAP Plants
BASF will invest $73 million to build a 120,000 mt/yr SAP plant at its Antwerp facility in Belgian. The startup of the plant at the end of 2001 will lead to the closure of two smaller German plants: BASF's 25,000 mt/yr unit in Mannheim; and Clariant AG's 35,000 mt/yr Frankfurt unit, which tolls SAP for BASF.
As a result, BASF will gain a net of 60,000 mt/yr in new capacity. Most output will serve the European market, which currently imports SAP from the United States. BASF says the new capacity will make imports "superfluous."
BASF also plans to build a second new superabsorbent plant in Brazil. When the 70,000 mt/yr unit comes on stream in 2002, it will lift BASF's overall superabsorbent capacity to more than 430,000 mt/yr.
Acrylic Acid Expansion
BASF also plans to implement a major expansion of acrylic acid capacity. Recent catalysis improvements are enabling the company to achieve boost output significantly with only minor modifications of existing facilities.
The company plans to increase acrylic acid capacity in Europe to 530,000 mt/yr, from 430,000 mt/yr, while raising NAFTA nameplate to 360,000 mt/yr, from 300,000 mt/yr. BASF will also open a new 160,000 mt/yr acrylic acid plant in Kuantan, Malaysia, in 2000.
The timing of the expansion is more iffy. The company says it will enlarge capacity "whenever market demand requires" and as BASF's growing captive rises. In fact, BASF's big downstream expansion into superabsorbent polymers could be seen as a "push" from improved acrylic acid production economics rather than a "pull" from growing markets.
By Alan S. Brown