BASF, the world's largest chemical company is in talks to acquire the debt-ridden Cognis, a maker of speciality chemicals owned by private equity firms Goldman Sachs Group Inc. and Permira Advisers Ltd, in a deal that commentators say may be valued approximately €3 billion ($4 billion).

Cognis, is a leading global supplier of innovative specialty chemicals and nutritional ingredients, with a particular focus on the areas of wellness and sustainability.

A former Henkel AG unit, Cognis was sold to the buyout firms in 2001.

If the deal materialises, it would become the second-biggest acquisition for the Ludwigshafen, Germany-based BASF, after acquiring Swiss rival Ciba for €3.8 billion in late 2008. (See: BASF plans to acquire Ciba Holding AG for approximately €3.8 billion)

The acquisition would enable BASF to reduce its dependance on plastics and chemicals made by Middle East competitors who produce them more cheaply.

reports say Lubrizol Corp. and DuPont Co could be expected to be interested in Cognis, which in a bid to pare down debt, hd earlier this month signed an agreement to sell its UV acrylates business, which manufactures and sells monomers and oligomers for UV applications marketed under the Photomer brand name, to IGM Resins BV, based in Waalwijk, The Netherlands, a global specialty chemicals manufacturer focusing on UV radiation curing markets.

The UV acrylates business is part of Monheim, Germany-based Cognis' functional products strategic business unit. The sale is expected to be formally completed by June 2010.

The company employs about 5,600 people, and operates production sites and service centers in 30 countries. Cognis delivers natural source raw materials and ingredients for the pharma, foods, beverages and dietary supplements markets, as well as for the cosmetics, detergents and cleaners industries.

Cognis is owned by private equity funds Permira Advisers Ltd, Goldman Sachs and SV Life Sciences, which was sold to private equity firms for €2.5 billion in 2001. As of December 2009, the company had debt of about €2 billion.

In 2009, Cognis recorded sales of about €2.6 billion and an adjusted EBITDA (operating result) of €364 million.
Bloomberg reported today that BASF may make an offer for Cognis as early as next week.