Global polypropylene powerhouse Basell NV is selling a plant in Cologne, Germany, to Dow Chemical Co.
The move is the result of European regulators' concerns about Basell's dominance in that region's PP market.
The 10-year-old plant produces 430 million pounds of PP annually and employs 71. Terms were not disclosed.
After Shell Petroleum NV of London and BASF AG of Ludwigshafen, Germany, merged their polyolefins assets to form Basell in late 1999, the European Commission ordered the new firm to sell 1.3 billion pounds of PP resin capacity and almost 300 million pounds of PP compounding capacity. The merger gave Basell a 40 percent share of the European PP market.
Basell and regulators agreed in September on a list of eight plants that could be sold. Cologne will be the first plant to be sold, and Basell expects to complete the deal by the end of the year, according to Edward Weeks, Basell's vice president of corporate communications.
"It's a funny situation," Weeks said in a March 23 telephone interview from London. "We'd like to keep the capacity, but we have to move the company forward. It's unsettling to everyone at the plants on the list."
Weeks added that the Cologne plant will be a good fit for Dow, because the plant uses Unipol process technology licensed from Union Carbide. Dow recently completed a long-delayed merger with Carbide. Most of Basell's PP plants use Shell/Montell's Spheripol-brand technology or BASF gas-phase technology.
"From a technology standpoint, [the Cologne plant] was a sore thumb," Weeks said.
Dow is a relative newcomer to the PP field, launching production in 1998 with a 550 million-pound-per-year plant in Schkopau, Germany, and acquiring a 200 million-pound-per-year plant in South Africa that same year.
The firm also opened a plant in Freeport, Texas, in January and snagged plants in Seadrift, Texas, and Norco, La., via the Carbide merger. The Cologne buy lifts Dow's global PP capacity to about 2.6 billion pounds per year.