FILE PHOTO: Flags of German chemicals company BASF are pictured in Monheim, April 20, 2012. REUTERS/Ina Fassbender/File Photo
Carlyle signage displays at the office in Manhattan in New York City, U.S., February 26, 2025. REUTERS/Jeenah Moon

By Ludwig Burger, Isla Binnie and Sabrina Valle

FRANKFURT/NEW YORK (Reuters) -BASF has agreed to sell a majority stake in its coatings business to private equity firm Carlyle and the Qatar Investment Authority, valuing the unit at 7.7 billion euros ($8.91 billion).

The companies said in a joint statement on Friday that BASF would retain a 40% stake in the coatings business and that it would also receive a pre-tax cash inflow of about 5.8 billion euros on completion of the transaction.

BASF put the coatings division up for sale at the start of the year as part of a wider strategy to focus on businesses that are closely integrated and physically connected within its major chemical plants across the globe.

The chemical company said that the transaction - when combined with the sale earlier this year of its decorative paints business to Sherwin-Williams - values BASF's entire coatings division at an enterprise value including debt of 8.7 billion euros, or about 13 times 2024 earnings before interest, tax, depreciation and amortisation (EBITDA).

Carlyle sees scope to grow the market share of its new acquisition in North America particularly, the group's global head for the industrial and transportation sectors, Martin Sumner, told Reuters.

Looking to the pipeline, Sumner said about three quarters of the potential deals his team are looking at are carve-outs, where conglomerates spin off assets, with the rest standalone opportunities.

"These deals take time," he added. "There's nothing that's near-term like this one, but could I see something in the first half of next year? Yes. And I certainly could by the second half."

BASF started approaching the market in the second quarter to explore strategic options for its remaining coatings activities, and was targeting a decision in the last quarter of the year.

It has said proceeds from a potential divestment could enable an earlier start to a previously announced share buyback of at least 4 billion euros between 2027 and 2028.

Financing for the deal includes leveraged loans and high-yield bonds with both U.S. dollar and euro-denominated tranches, Sumner said. "The debt markets are very robust," he added.

($1 = 0.8642 euros)

(Reporting by Ludwig Burger in Frankfurt and Isla Binnie and Sabrina Valle in New York; Additional reporting by Alexander Huebner; Editing by Friederike Heine and Kirsten Donovan)