The deal – pegged at a cash and debt-free €1.15bn – should close at the end of next year, guided by a transition team and subject to approval from relevant competition authorities.
Kaoru Ino, president and CEO of DIC, said the acquisition of BASF’s ‘Colors & Effects’ (BCE) unit would help drive DIC towards its goal of 1 trillion yen in sales (approximately €8bn) by 2025.
“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,” Ino said.
‘Complementary’ footprint and product portfolio
The acquisition formed part of wider growth plans that involved creating new business pillars. DIC’s current Color & Displays business unit, for example, already catered to a range of sectors, including automobiles and displays, but the BASF acquisition stretched operations into effect pigments for cosmetics with “little product overlap”.
“Through this acquisition, DIC will add a functional pigments product portfolio which is highly regarded by customers,” the company said.
Yoshinari Akiyama, executive officer and general manager of Color Material Products at DIC, said the acquisition was “extremely ideal” due to the “complementary regional footprint and product portfolio”.
A “strategic” acquisition, Akiyama said it would strengthen DIC’s presence in Europe but also cosmetics and the niche but high-growth and high-value functional pigments category.
‘Strategic’ divesture for BASF
Established in 2016, BASF’s global pigments business – Color & Effects – had already come a long way and “developed positively and returned to a profitable growth plan”, said Christine Haupt, spokeswoman at BASF SE.
“The divesture of the business is not related to business performance, it is based on the strategic decision to focus BASF’s portfolio towards innovative growth businesses,” Haupt told CosmeticsDesign-Europe.
BASF would remain a strong and leading supplier in cosmetics, she said, with a range of ingredients like sufactants, emulsifiers, polymers, active ingredients and UV filters, but DIC was well-placed to drive the pigments business further.
“The combination of both businesses, BASF’s Colors & Effects and DIC, creates a world-class portfolio, with an excellent product range and global manufacturing and supply footprint to better serve customers’ needs. Bringing together both companies’ capabilities related to innovation, product stewardship, regulatory and alike, will allow for the exchange of best practices and improved customer offerings,” she said.
Dr. Markus Kamieth, executive board member of BASF, said: “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.”