BASF ventures into strategic alliances

With the major players in the petrochemicals sector changed beyond recognition by mergers and acquisitions, the sector's largest company, BASF, has opted for a series of joint ventures to gives its businesses a competitive edge. The German behemoth is to merge its polyolefins businesses with those of Shell, while its textile dyes division will join forces with the existing Bayer/Hoechst joint venture DyStar.

BASF and Shell will have equal stakes in the as-yet unnamed polyolefins venture, which will be based in the Netherlands. It will absorb Elenac, the existing BASF/Shell polyethylene joint venture, and Targor, the polyolefins joint venture with Hoechst, of which BASF will plan the half-share it does not already own before the merger takes place.

The new company will be the world's largest producer of polypropylene and the fourth-largest in polyethylene, and will have annual turnover around $6billion.

The colorants proposal will see BASF absorbing its textile dyes businesses into DyStar, which is currently 50:50 owned by Bayer and Hoechst. The three companies are expected to own equal shares of the new businesses.

Meanwhile, BASF is to sell its master batch business. `We are structuring our whole colorants business for long-term success and safeguarding the 7000 jobs involve,' says colours division president Walter Gramlich.

* BASF's pre-tax profits tumbled 62 per cent in the third quarter, to E290million, although if special items are excluded income rose 17 per cent to E624million. Sales rose 12 per cent to E7.24billion. The company has been hit badly by provisions for lawsuits in the US over the vitamin cartel scandal.