Morris Township, N.J.—In a move which makes its already large nylon fibers business even bigger, Honeywell has acquired the fiber business of BASF. Honeywell announced definitive agreements with BASF for two transactions that are part of a planned restructuring of Honeywell’s Specialty Materials unit. Under terms of the agreements, Honeywell will sell its engineering plastics business to BASF and will acquire BASF’s nylon fibers business. Honeywell will receive $170 million in cash and all of BASF’s nylon fiber business at closing. Honeywell will pay $80 million to BASF within one year of the transaction’s close.

Significant synergies will result from the integration of BASF’s nylon fiber business with Honeywell’s existing nylon business, noted Nance Dicciani, president and CEO of Honeywell Specialty Materials. Honeywell expects increased utilization of its Hopewell, Va., caprolactum manufacturing facility that will supply nylon feedstock to the combined business as well as its fiber and plastics customers. The company added that it will retain its nylon films business and all of its specialty chemicals operations. The transactions are expected to close in the first half of this year, subject to regulatory approval in several jurisdictions.

For Honeywell, the result of the transaction is cash and a stronger nylon business that will be greater than the sum of its individual parts, noted Dicciani. “The combination of Honeywell’s and BASF’s nylon fiber business will result in greater economies of scale and increased cost synergies providing a stronger, more valuable business with more strategic opportunities and flexibility in the future,” she said. “This transaction is a significant step in our plans to rationalize the business by improving its current financial performance and long-term growth prospects. “The plastics transaction will allow us to exit a non-core compounding business,” she added. “The nylon transaction represents a unique opportunity to create a fully integrated business with the scale and synergies to make it a more valuable asset with the flexibility to serve the needs of both fiber and plastics customers.”

BASF is selling its nylon fibers business to ensure its long-term competitiveness as part of a larger entity. “With these portfolio changes, BASF is strategically realigning and enhancing its market position in plastics,” said Dr. John Feldman, the member of the board of executive directors of BASF Aktiengesel-lschaft responsible for the Plastics & Fibers segment. As a result of the transaction, BASF will enhance its position as a leading global supplier of engineering plastics. The agreement includes manufacturing facilities, research and development assets, and sales and technical service locations worldwide. The business being acquired includes about 500 Honeywell personnel.

“With this acquisition, we are bringing together the best teams in the industry,” said Raimar Jahn, president of BASF’s Performance Polymers division. In 2001, Honeywell’s engineering plastics business had sales of about $350 million, while BASF’s nylon fibers group sales were approximately $350 million for the same year. Sales for Honeywell’s retained nylon business in 2001 totaled nearly $700 million. The nylon transaction offers significant economies of scale and costreduction opportunities for Honeywell: a robust pipeline of products, including its Anso carpet fiber brand; and strong customer channel access, noted Dicciani. It will include fiber and polymerization manufacturing plants, research facilities and sales offices in North America from both companies, with manufacturing plants in South Carolina, Virginia, Canada and China.

The businesses currently employ approximately 1,600 BASF personnel and 2,500 Honeywell personnel. The transaction includes a nylon carpet fiber business that serves the commercial, automotive and residential markets; textile products, including a diversified line of nylon yarns for apparel fabrics; nylon, for automotive headliner fabrics; and solution dyed Zeftron 200 nylon, for upholstery fabrics. BASF’s fiber intermediates plants in Freeport, Tex., and Enka, N.C., as well as its related facilities outside North America (except the Hua Yuan plant in Shanghai, China), are not included in the sale.

Honeywell’s global engineering plastics portfolio includes nylon, polyester and alloys offered in the Capron (nylon 6 and nylon 6,6), Petra (post-consumer recycled polyester) and Nypel (post-industrial nylon 6) product lines. The agreement covers polymerization and compounding facilities, research and development assets and sales and technical service locations in North America, Europe and Asia. The transactions portend a brighter future for Honeywell’s Specialty materials group, according to Dicciani. “These changes highlight our commitment to focus on higher-margin growth opportunities that can contribute to the overall profitability of Honeywell. We are confident that, with the transaction, we are on the right track.” —Louis Iannaco