In a swap of cash and assets, Honeywell Inc. is selling its engineering resins business to BASF AG in exchange for BASF's nylon fibers unit and $90 million cash.
Honeywell's engineering resins unit - which posted sales of $350 million last year - consists of nylon 6 and polyester resins and compounds. BASF now acquires a nylon resin and compounding line in Chesterfield, Va., as well as a 125-employee nylon compounding plant in Sparta, Tenn. The deal also includes nylon production in Rudolstadt, Germany; Ansan, South Korea; and Sao Paulo, Brazil.
Honeywell will continue to operate nylon lines in Chesterfield and Rudolstadt for BASF, which will market and sell the material. Those plants produce a variety of other Honeywell products not included in the deal.
The Honeywell Specialty Films unit - a major nylon film producer - and a dormant recycling plant in Augusta, Ga., also are not included in the deal. The recycling plant was operated by Evergreen Nylon Recycling LLC, a joint venture between Honeywell and DSM NV.
In a news release, Honeywell officials said the firm will continue to supply the resin and fibers businesses with caprolactam feedstock from its plant in Hopewell, Va.
Honeywell of Morris Township, N.J., near Morristown, will add BASF's fibers business - with annual sales of $350 million - to its own fibers business, which had sales of $700 million last year.
``As the marketplace looks to economies of scale, this was the right time for the deal,'' Honeywell spokeswoman Emily Metzger said by telephone.
Business units involved in the deal, including a Honeywell carpet fiber business that will go to BASF, currently employ 3,000 at Honeywell and 1,600 at BASF.
Ludwigshafen, Germany-based BASF's fiber intermediates plants in Freeport, Texas, and Enka, N.C., are not included in the deal, which is expected to close in the first half of 2003.
The deal represents a strong move forward for BASF and its plastics and fibers unit, which had cut back on North American acetal and expandable polystyrene production in the past year.
``It's an excellent fit that will augment our position as a leader in engineering resins,'' said BASF spokesman Tim Fitzpatrick. ``These products should increase our presence in the packaging, automotive and construction markets.''
Plastics and fibers is the largest of BASF's five operating units, posting sales of almost $6.4 billion in the first nine months of 2002. That figure represented 26 percent of total BASF sales.
Through September, BASF's plastics and fibers sales were up almost 2 percent over the same period in 2001. BASF's total sales were down almost 3 percent to $24.2 billion in the same period.
The plastics and fiber unit's products include acetal, polystyrene, expandable PS, styrenic copolymers, nylon, ABS, polyurethane and other specialty plastics.
Industry consultants Balaji Singh and Lou Rossi each said the deal will have immediate benefits for both sides.
BASF will gain expertise in high-heat nylon applications in automotive and appliance markets, according to Singh, president of Chemical Market Resources Inc. in Houston. Rossi, a partner with Principia Partners in Exton, Pa., said the deal ``aligns resources with each company's strengths.''
``BASF now adds to its status as the biggest nylon 6 producer in the world,'' Rossi said. ``And while [the deal] doesn't put Honeywell into any new fiber markets, it definitely makes them bigger.''