LafargeHolcim Decides Against Bid for BASF Unit

(Bloomberg) -- LafargeHolcim Ltd. decided against bidding for BASF SE’s construction chemicals unit, according to people familiar with the matter, dropping a plan that would have taken the Swiss cement giant further into the production of more specialized materials.

LafargeHolcim was the last strategic suitor pursuing the business that makes additives because of BASF’s valuation expectations, said the people, who asked not to be identified because the information is private.

The cement producer based near Zurich also had concerns about how long it would take for BASF to execute the sale, which could hurt the performance and integration of the business, they said. LafargeHolcim shares rose as much as 2% in early Zurich trading on Thursday while BASF rose 0.4%.

LafargeHolcim was widely seen as natural buyer for the business, which BASF hopes will fetch more than 3 billion euros ($3.3 billion) in a sale. It was competing against the private equity firm Cinven and Standard Industries Inc., which pulled out last month. The Swiss company’s decision will shift the focus of the sale to potential private equity buyers and may be a disappointment for BASF, which has long preferred to do deals with industrial companies.

Several private equity suitors for the BASF unit have already walked away from the bidding, with some saying the German company was reluctant to provide detailed information on the segment’s earnings that they needed to secure financing, Bloomberg reported in August.

Chryso Synergies

Cinven owns the construction chemicals firm Chryso, which could help it realize synergies but may also pose antitrust issues.

BASF hasn’t made a final decision on whether to sell the unit, the people said. Some potential bidders who have dropped out could always decide to re-enter the process if the situation changes, they said.

Representatives for LafargeHolcim, BASF and Cinven declined to comment.

BASF announced a strategic review of the construction chemicals division last October. The division supplies mortars and cement additives, as well as waterproofing materials and sealants under the Master Builders Solutions brand.

Financial Discipline

LafargeHolcim, the world’s biggest maker of building materials, was created in 2015 from the merger of Lafarge SA and Holcim Ltd. Chief Executive Officer Jan Jenisch said in an interview last month that the firm was now ready to expand through further acquisitions.

He said the company’s approach, though, would be cautious and it would apply strict financial discipline with any targets.

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