German chemicals producer BASF SE is establishing a new business unit Styrolution that will integrate the bulk of its styrenics operations, which have been under review since 2007.
The new Styrolution unit will include the company's styrene monomer, polystyrene, ABS, styrene butadiene copolymer and other styrene-based copolymer operations. It will employ around 1,460 and generated sales in 2009 of around 2.5 billion euros ($3.5 billion).
BASF's global PS foams operation and the styrene monomer and PS capacity in Ludwigshafen, Germany, dedicated to the foams business will remain with the parent company.
The move, which it plans to complete by the end of the year, is part of BASF's ongoing strategic development of its styrenics business, which has been under review for three years and is aimed at disposing of the operation.
The establishment of Styrolution is a further step in the implementation of BASF's strategy for its styrenics business, said Martin Brudermuller, member of the board of executive directors of BASF with responsibility for its plastics business.
Through this action, we will be able to sustain and improve our global business in an environment characterized by volatile demand, high pressure on margins and intensive competition. At the same time, we remain open for other strategic options, Brudermuller said in a statement.
A spokesman for BASF declined to comment on whether the company was currently involved in discussions with potential purchasers or investment partners for the Styrolution business unit.
However, he said the formation of the new business continued a process of carving out the styrenics business unit that was initiated in 2008 but suspended during the recession.
What we have also said, and it is still true, is that it is the plan [to divest the business], he said.
Styrolution will include BASF's styrenics businesses at its production sites in Ludwigshafen and Schwarzheide, Germany; Antwerp, Belgium; Ulsan, South Korea; Dahei, India; and Altamíra, Mexico.
Separate companies will be established in other countries, such as the United States, Italy and China, where the company has styrenic marketing or sales activities.
BASF said in a statement that customer service and supply will be unaffected by the restructuring, pointing to expected improvements in efficiency, service and technical support as a result of the move.
BASF has long made it clear that it was unhappy with the performance of its styrene business. In 2007 it announced it was considering an offer for the operations from a third party. It had previously sold its North American operations in 2005 to Ineos Group.
In March of this year, Dow Chemical Co. sold its Styron division to U.S. private equity group Bain Capital Partners for $1.63 billion. The Styron portfolio included Dow's styrenics, emulsion polymers and polycarbonates activities.