BASF, the German chemicals group, has joined the sector's recent drive towards consolidation by purchasing Albemarle's Chemetall unit for $3.2 billion (€2.8 billion).

Albemarle is a $9 billion specialty chemicals business based in Baton Rouge, Louisiana. Its Chemetall unit, a leading global surface treatment business for the auto and aerospace industries, is based in Frankfurt.

Half of the unit’s $845 million sales last year stemmed from western Europe.

The acquisition follows a series of much higher-profile mergers and acquisitions in the sector in recent months.

Dow Chemical and Dupont, the two largest US chemicals groups, announced plans for a $130 billion merger last December. In February, ChemChina bid $43 billion for Switzerland’s Sygenta. And, last month, BASF’s German rival Bayer bid $62 billion for American agribusiness Monsanto.

This deal is much smaller, though it is relatively large for BASF. It has not made an acquisition on this scale since 2011, when it purchased specialty chemicals company Cognis for €3.1 billion.

BASF is the largest chemical company in the world, with €70 billion in sales last year. It, said the all-cash deal would complement its paints and coatings division, which last year recorded sales of €3.2 billion.

Wayne T Smith, the BASF board member in charge of coatings, said company’s aim was “to grow profitably in downstream, innovation and solution-focused businesses”.

Albemarle chief executive Luke Kissam said the sale would help his company invest in future growth by reducing leverage and returning capital to shareholders.

Chemetall has 2,500 employees across 21 production sites. Its operating margins are expected to grow from 24 per cent last year to 26 per cent next year.

Its main products are chemical treatments for cleaning, sealing and protecting metals.

– (Copyright The Financial Times Limited 2016)