Commission approves Carlyle's acquisition of BASF Coatings, subject to conditions

The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of BASF's coatings division ('BASF Coatings') by The Carlyle Group Inc. ('Carlyle'). The approval is conditional upon full compliance with the commitments offered by Carlyle, which entails divesting the worldwide polysulfides business of Nouryon Ltd. ('Nouryon') to a suitable purchaser.

Carlyle is a global investment firm. Its portfolio includes Nouryon, which is a global specialty chemicals company. Nouryon develops and supplies essential chemical ingredients, additives, and intermediates used in a wide range of end markets, including coatings and sealants.

BASF Coatings develops, produces and sells coating products and solutions for the automotive industry, applied surface treatments for various other industries, and coatings and sealants for aerospace original equipment manufacturers.

The Commission's investigation

The Commission had concerns that the transaction, as initially notified, would lead to foreclosure in the markets for the production and supply of polysulfides for aerospace sealants, in which Nouryon is active, and the production and supply of aerospace sealants, in which BASF Coatings is active.

In particular, the Commission's investigation found that the merged entity would likely have the ability and incentive to limit the access of BASF Coatings' competitors to polysulfides for aerospace sealants, given that:

• polysulfides are a critical input in the production of aerospace sealants, with no available substitute for this application;
• Nouryon has significant market power in the market of polysulfides for aerospace sealants, being one of only two global suppliers; and
• switching polysulfides suppliers is costly and time-consuming for aerospace sealant manufacturers.

The Commission's investigation also found that the merged entity may have the ability and incentive to use commercially sensitive information available to Nouryon, to put BASF's Coatings' rivals at a competitive disadvantage.

The proposed remedies

To address the Commission's preliminary competition concerns, Carlyle offered the following remedies:

• To divest Nouryon's worldwide polysulfides business to a suitable purchaser. This includes Nouryon's Greiz Plant, which manufactures all of Nouryon's polysulfides supply, and all relevant assets, licenses, contracts and staff;
• To find a purchaser with a sound understanding of industrial supplier qualification processes. The purchaser must be a company with proven expertise in the chemical industry, or a financial investor with experience managing companies in the chemical industry.

These commitments fully address the competition concerns identified by the Commission by fully removing the vertical relationship between the two companies' activities in the production and supply of polysulfides for aerospace sealants, as well as aerospace sealants themselves.

Following the positive feedback received in the context of the market test, the Commission concluded that the transaction, as modified by the commitments, would no longer raise competition concerns in the European Economic Area ('EEA').

The decision is conditional upon full compliance with the commitments. Under the supervision of the Commission, an independent trustee will monitor their implementation. The Commission will assess the suitability of buyers proposed by Carlyle in the context of a separate buyer approval procedure.

Companies and products

Carlyle, headquartered in the US, is a global investment firm with 3 business segments: Global Private Equity (including corporate private equity and real estate funds); Global Credit (including liquid credit, illiquid credit, and real assets credit); and Carlyle AlpInvest (including primary, secondary, and co-investments, commingled funds, and separately managed accounts).  

BASF Coatings is the coatings division of BASF SE ('BASF'), headquartered in Germany. BASF Coatings encompasses the following divisions: Surface Treatment, Automotive OEM Coatings and Automotive Refinish Coatings.

Merger control rules and procedure

The transaction was notified to the Commission on 8 April 2026.

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the EU Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the European Economic Area or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). If commitments are proposed in Phase I, the Commission has 10 additional working days, bringing the total duration of a Phase I case to 35 working days, such as in this case.

For more information

More information will be available on the Commission's competition website, in the public case register under the case number M.12237.