Air Products in advanced talks to sell performance materials unit to Germany's Evonik

US industrial gas supplier Air Products and Chemicals Inc is in advanced talks to sell its performance materials operations valued at more than $3.5 billion to Germany's Evonik Industries AG, the Wall Street Journal reported, citing people familiar with the matter.

The move comes a year after Air Products said that it plans to spin off its materials technologies business into a publicly-traded company via a tax-free spin-off to its shareholders before September 2016.

The performance materials unit includes specialty surfactants, specialty amines, polyurethane additives, epoxy curatives and resins.

Air Products, whose rivals include Praxair Inc, France's Air Liquide SA and Germany's Linde AG, has recently been hit by high exposure to sluggish growth in Europe.

Analysts say it should divest its non-core gas businesses, which account for around 20 per cent of its annual sales of $9.9 billion.

Bill Ackman's Pershing Square hedge fund is Air Products biggest shareholder with around 9.56 per cent stake worth $2.6 billion.

Air Products is a supplier of industrial, energy, technology and healthcare markets worldwide with a unique portfolio of atmospheric gases, process and specialty gases, performance materials, and equipment and services.

Founded in 1940, Air Products is a key player in semiconductor materials, refinery hydrogen, home healthcare services, natural gas liquefaction, and advanced coatings and adhesives in key growth markets with operations in over 40 countries employing 18,900 people globally.

Air Products, whose customers include Apple and Intel, is the world's largest hydrogen producer and has a market capitalisation of nearly $28.9 billion.

It has a profitable packaged gas business in Europe and other key international markets, but is a small player in the domestic market, where its smaller rival Airgas dominates the US market.