Dainippon Ink & Chemicals has agreed to buy BASF Colors & Effects, the German company’s pigments and speciality materials business.
This will help DIC, owner of the world’s largest printing ink business Sun Chemical, build a more balanced business profile comprising three distinct pillars: printing inks, colour displays and functional. Currently the inks business accounts for 52% of sales with colour and display providing 15% of revenue. The latter will absorb the BASF operation and with organic growth in functional materials will result in a business with three roughly equal pillars and sales of
The deal will have little impact on the Sun Chemical printing inks operations. BASF has previously sold off its own inks interests, which have ended up as part of Flint Inks. It will have a larger impact on DICs automative paints and coatings business and in expanding pigment operations around the world. There is little overlap in products, facilities and locations says DIC.
The deal is valued at €985 million, €1.15 million to include the operation’s debts. It fits with what is called DIC’s 111 strategy (the company was founded 111 years ago). This calls for the creation of a third pillar, which the deal addresses, and value transformation, aiming to grow higher value products. This includes matching packaging inks and substrates in the packaging and inks division. It is also plans to increase its inkjet business and further acquisitions have not been ruled out in pursuit of this aim.
“Our acquisition of BCE brings together complementary resources and expertise of two recognised leaders in innovation, product stewardship, regulatory leadership, application support and manufacturing,” said Kaoru Ino, president and CEO of DIC. “We have outlined a clear growth path for DIC with the target to increase our sales to 1 trillion yen (approximately €8 billion) by 2025. 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 offering as one of the leading pigment suppliers globally and provide our customers even more versatile solutions.”
BASF had hung the for sale sign on its pigments business as it is no longer considered core to the chemicals giant. The division has sales of €1 billion with operating profit of €120 million. It employs 2,600 with 11 production facilities (six in Europe) and four R&D laboratories around the world. DIC has a further 24 production facilities enabling the business to offer special effect pigments, inorganic pigments, organic pigments, speciality dyes and associated chemistry as one of the largest pigment businesses in the world.
The deal is expected to receive clearance from competition authorities before the end of the year with the full integration due for completion by the end of next year.
By Gareth Ward