Spartech Corp. has grown its European compounding business by acquiring the specialty polystyrene compound business of BASF AG.
The sale includes product formulations, marketing data and intellectual property, but no manufacturing assets. Spartech will produce the materials at its plant in Donchery, France. BASF had made the compounds in Ludwigshafen, Germany.
No purchase price was disclosed in the deal, announced March 31. The business has annual sales of about $11 million.
The unit's product mix includes flame-retardant compounds for the communications, electrical engineering and consumer electronics markets; as well as anti-static compounds for coextrusion layers in food packaging and drinking cups.
Spartech manufactures similar compounds in the United States and was looking to expand its presence in Europe, according to Randy Martin, the firm's executive vice president and chief financial officer.
``This is part of a trend of compounders looking to grow in areas that are not core to their business,'' Martin said in an April 1 telephone interview.
For Ludwigshafen-based BASF, the sale helps consolidate its product range and concentrate styrenics production on high-volume products in high-efficiency plants, according to Herbert Wieland, director of business development and technology for styrenics.
Color and specialty compounds represented about 28 percent of Clayton, Mo.-based Spartech's total sales of $263 million in fiscal 2003. Sales in color and specialty compounds were up 12 percent in 2003, although the unit's operating profit dropped 18 percent to $21 million. The firm also is North America's largest plastic sheet maker.
The BASF purchase will lift Europe's share of Spartech's compounding business above 10 percent, Martin said.
Spartech also is adding a twin-screw extrusion line for compounds in Donchery and installing sheet extrusion equipment there. The sheet equipment will be Spartech's first in Europe. Martin said the firm will produce six-layer sheet of polyethylene/ ethylene vinyl alcohol in Donchery for Visteon Corp., which is making fuel tanks for the 2005 Volkswagen Passat.
The total investment in Donchery - including the addition of 90,000 square feet of manufacturing space - will be around $5 million, Martin said. The new compounding line - the site's fourth - will be in place by midyear, while sheet production is to begin in October.
The project is expected to increase the number of jobs in Donchery to 75, from 40.