BASF, Ineos Join For Styrenics

BASF

The joint venture will include Styroflex, a BASF polymer used in puncture-resistant film.

BASF and Ineos, two of the world's largest chemical companies, have agreed to combine their styrenics businesses into a joint venture called Styrolution. The partners say the new company will be the global leader in styrene, polystyrene, and other styrenic plastics.

With annual sales of more than $6.5 billion, the 50-50 venture will operate 29 plants in 11 countries and employ more than 3,000 people. Its headquarters will be in Frankfurt, Germany.

The big joint venture will be the culmination of five years of restructuring for the styrene-based plastics industry, which has underperformed other polymer businesses for the past decade.

In 2005, Ineos acquired BASF's U.S. polystyrene business and formed a styrenics joint venture with Nova Chemicals. Earlier this year, Dow Chemical sold its styrenics business to the private equity firm Bain Capital. More recently, Ineos acquired Nova's share of their joint venture, and BASF said it would turn its styrenics business into a separate company.

Andreas Heine, who covers BASF for the European investment firm UniCredit, thinks another move may be in the cards. "It might be that the joint venture is only the first step," he told clients in a research note following the Styrolution news. He drew a comparison to the creation of Basell in the late 1990s from the polyolefin businesses of BASF, Shell, and Hoechst. Basell was subsequently sold and is now part of LyondellBasell Industries.

For now, though, BASF and Ineos are focused on launching their joint venture, which they hope to complete next year, pending approvals by antitrust authorities. "It is our plan to create a leading player in the global styrenics market in terms of efficiency, safety, customer service, product quality, and competitiveness," said Martin Brudermüller, a BASF board member.

BASF will contribute roughly three-fifths of Styrolution's sales and, by Heine's reckoning, the more profitable business. In recognition of its larger contribution, the German firm will receive a cash payment from Ineos after completion of the deal.

In addition to styrene and polystyrene, the venture will include acrylonitrile-butadiene-styrene, styrene-butadiene block copolymers, and various specialty styrenic polymers. BASF and Ineos will keep their respective businesses in expandable polystyrene.

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