Morris Township, NJ, Jan. 14--Honeywell has agreed to purchase BASF’s $350 million nylon fiber business as part of a deal in which BASF will acquire Honeywell’s engineering plastics business.
Under terms of the agreements, Honeywell will sell its engineering plastics business to BASF and will acquire BASF's nylon fiber business. Honeywell will receive $170 million in cash and all of BASF's nylon fiber business at closing. Honeywell will pay $80 million to BASF within one year of the transaction's close.
As a result of the integration of BASF's nylon fiber business with Honeywell's existing nylon business, Honeywell expects increased utilization of its Hopewell, Virginia caprolactam manufacturing facility that will supply nylon feedstock to the combined business as well as its fiber and plastics customers. The company added that it will retain its nylon films business and all of its specialty chemicals operations.
The transactions are expected to close in the first half of 2003, subject to regulatory approval in several jurisdictions.
"The combination of Honeywell's and BASF's nylon fiber businesses will result in greater economies of scale and increased cost synergies, providing a stronger, more valuable business with more strategic opportunities and flexibility in the future," said Nance Dicciani, president and CEO of Honeywell Specialty Materials. "This transaction is a significant step in our plans to rationalize the business by improving its current financial performance and long term growth prospects. The plastics transaction will allow us to exit a non-core compounding business. The nylon transaction represents a unique opportunity to create a fully integrated business with the scale and synergies to make it a more valuable asset with the flexibility to serve the needs of both fiber and plastics customers."
In 2001, Honeywell's engineering plastics business had sales of about $350 million and BASF's nylon fibers group sales were about the same. Sales for Honeywell's retained nylon business in 2001 totaled nearly $700 million.
The nylon transaction offers significant economies of scale and cost-reduction opportunities for Honeywell: a robust pipeline of products, including its Anso carpet fiber brand; and strong customer channel access.
It will include fiber and polymerization manufacturing plants, research facilities and sales offices in North America from both companies, with manufacturing plants in South Carolina, Virginia, Canada and China. The businesses currently employ approximately 1,600 BASF personnel and 2,500 Honeywell personnel. It also includes a nylon carpet fiber business that serves the commercial, automotive and residential markets; textile products, including a diversified line of nylon yarns for apparel fabrics; nylon, for automotive headliner fabrics; and solution dyed Zeftron 2000 nylon, for upholstery fabrics.
BASF's fiber intermediates plants in Freeport, Texas, and Enka, North Carolina, as well as its related facilities outside North America (except the Hua Yuan nylon carpet fibers plant in Shanghai, China), are not included in the sale.
