BASF proposes to reduce the scope of the nylon business acquisition to obtain EU approval

BASF said on Monday that the company has made a number of commitments to the EU to resolve antitrust concerns arising from its plans to acquire Solvay's nylon business for 1.6 billion euros ($1.85 billion).

BASF's plan to acquire Solvay SA's nylon business was launched in September 2017, triggering a European Commission's investigation into the merger of the two companies, including control of raw material supply. BASF said that It has been proposed not to acquire the 'some parts' of Solvay's European nylon business, but the company did not specify which parts will be abandoned.

BASF does say that the transaction will not include the innovative capabilities and manufacturing assets of the Solvay intermediates and engineering plastics business.

The chemical company said that after the concession, the transaction will proceed smoothly, and the company is optimistic. BASF issued a message on Twitter on Monday: 'The regulatory approval process for the acquisition of Solvay Nylon is advancing.'

The online record of the EU competition enforcement agency has confirmed that BASF submitted a commitment on the transaction on Monday, but did not disclose more details.

'The European Commission is reviewing this proposal and will submit it for market testing before completing the review process,' BASF said.

According to the EU, market testing takes into account the views of market participants, and if the remedies are accepted, they will bind the companies in the M&A review.

An independent trustee will then be appointed to monitor compliance with the commitments.

In the BASF/Solvay merger, regulators are increasingly concerned that the deal will limit plastic raw materials, pushing up the cost of competitors and the price of consumer products.

BASF said the deal was a way for the company to expand nylon production after the merger. But unlike BASF, Solvay produces a material called adiponitrile (ADN), which is a key Nylon raw materials, sold to other producers in the supply chain, are part of the cause of concern.

On Monday, BASF did not explain how its concession promises to deal with the ADN issue, but the company said in a press release that it is building the production capacity of the material through consolidation.

The company said: 'By improving the engineering plastics product portfolio, further expanding channels, entering major growth markets in Asia and South America, and strengthening the value chain through backward integration of major raw materials such as ADN... BASF will still achieve Its key strategic objectives. '

According to the company's statement: 'BASF will continue to work closely with the European Commission. The European Commission is expected to make a decision in early 2019. ' As of now, the deal has been approved by eight of the world's 10 regulatory agencies.

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