en.Wedoany.com Reported - The European Commission has approved Carlyle's acquisition of BASF's coatings business, on the condition that the US private equity firm divest a key chemicals operation to address competition concerns in the aerospace sector.
Regulators noted that the deal would merge Carlyle's specialty chemicals producer Nouryon with BASF Coatings, potentially weakening competition in the aerospace sealant supply chain.
Approval is conditional on Carlyle selling Nouryon's global polysulfide business, including the production plant in Greiz, Germany, along with related assets, contracts, licenses, and personnel.
The investigation revealed that the original transaction could allow the merged entity to restrict competitors' access to polysulfide, a critical ingredient used in aerospace sealants for which no substitutes currently exist.
Nouryon is one of only two global suppliers of polysulfide for aerospace sealants, holding significant market power. Regulators believe that switching suppliers would be costly and time-consuming for aerospace sealant manufacturers, potentially putting competitors at a supply disadvantage post-merger.
The European Commission warned that the merged entity could gain access to commercially sensitive information through Nouryon's supplier relationships, placing BASF Coatings' competitors at a disadvantage.
To secure approval, Carlyle committed to divesting Nouryon's global polysulfide business to a buyer with expertise or relevant experience in the chemical industry, who must also demonstrate a deep understanding of industrial supplier qualification processes.
The European Commission stated that these remedies fully address competition concerns by eliminating the vertical link between Nouryon's polysulfide business and BASF Coatings' aerospace sealant operations.
Following positive feedback from a market test of the proposed commitments, the Commission concluded that the modified transaction would not pose competition issues within the European Economic Area.
An independent trustee will oversee the implementation of the commitments, and the Commission retains the right to approve the final buyer.
US-based Carlyle is a global investment firm whose portfolio includes Nouryon. BASF Coatings, part of Germany's BASF Group, provides coatings and surface treatment products for the automotive, aerospace, and industrial sectors.
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