BASF Eyes Twin Engines of Growth: Chinese Tech Licensing and Coatings Divestiture Green Light

European Commission clears €5.8bn divestiture to Carlyle with conditions; BASF showcases catalysts and high-pressure equipment at Shanghai expo, doubling down on technology licensing to boost margins.

The Ludwigshafen-based chemicals giant is navigating a carefully calibrated dual-track strategy, pushing ahead with high-margin technology licensing in China while clearing the final regulatory hurdle for the sale of its coatings arm to private equity firm Carlyle. The twin developments, announced within days of each other, underscore a concerted effort to reshape both the portfolio and the profit profile.

Brussels has given its blessing to the €5.8bn-plus divestiture, with the European Commission approving the transaction subject to conditions. Carlyle must offload Nouryon’s global polysulfide business — specifically the site in Greiz, Thuringia — to satisfy antitrust concerns. Polysulfides are critical for sealants used in aerospace applications, and an independent trustee will oversee the disposal. For BASF, the green light removes a major source of uncertainty, clearing the runway for the share buyback programme that kicked off late last year. Since its launch, the company has repurchased roughly 27.8 million of its own shares.

Parallel to the regulatory clearance, BASF turned the spotlight on its technology licensing business at the China International Petrochemical Technology and Equipment Exhibition in Shanghai. From 9 to 11 June, the group showcased catalysts, high-pressure equipment capable of withstanding up to 3,600 bar, and process licences for the petrochemical sector. This is a corner of the business that typically operates outside the glare of the coatings divestiture spotlight, but it is exactly the kind of high-margin, less cyclical revenue stream management wants to amplify.

The China push is no coincidence. In the first quarter, BASF reported solid volume growth, much of it driven by demand from the world’s second-largest economy. Group sales slipped to €16.02bn, weighed down by currency effects and lower prices, while earnings before interest, taxes, depreciation and amortisation before special items came in at €2.36bn, a touch softer than a year earlier. Net profit, however, climbed nearly 15% to €927m, offering a bright spot in an otherwise mixed set of figures.

The Shanghai appearance signals where the group intends to expand its footprint: process licences for petrochemicals, emission-reducing catalysts, and specialty high-pressure equipment are all technology-intensive businesses that carry fatter margins and are less vulnerable to the swings of the commodity chemical cycle.

Management continues to stand by its full-year targets. Underlying EBITDA is expected to land between €6.2bn and €7.0bn, while free cash flow should range from €1.5bn to €2.3bn. The China announcement did not come with any revision to those numbers, and the final closing of the coatings transaction — which will determine whether cash flows in at the upper end of the guidance band — has yet to be communicated by BASF.

On the leadership front, the company has appointed Steve Arndt, a former Axalta executive, as senior vice president of global automotive refinish coatings, replacing Chris Titmarsh. The change comes as the coatings division prepares for life under new ownership.

BASF shares closed at €50.61 on Thursday, having gained around 13% since the start of the year. That still leaves the stock roughly 8% below its 52-week high of €55.05 hit in April. At €50.57, the relative strength index of 42.4 suggests no overheating, and while the price sits below its 50-day moving average, it remains above longer-term trend lines.

Whether the China licensing offensive can deliver meaningful volume and contract wins in a tough chemical environment remains to be seen — the exhibition provided no new deal figures. But the clear signal on operational direction, combined with the closing of a major portfolio shift, gives investors two distinct levers to watch as the year progresses.