Akzo Nobel has agreed to divest part of its liquid coatings activities in the agricultural and construction equipment (ACE) segment to BASF. In a separate deal, Akzo Nobel will acquire BASF Coatings’ Wood Construction business. The financial details of the two transactions were not disclosed. The BASF business had sales of EUR 17 million in 2003; the ACE business EUR 9 million.

The divestment involves the ACE activities of Akzo Nobel’s Car Refinishes business in Germany, Austria, France, Italy, Switzerland and Spain. The manufacture of these coatings will be transferred from Akzo Nobel’s sites in Zona Franca (Spain), Stuttgart (Germany) and Montataire (France) to one of BASF’s coatings sites.

With regards to Akzo Nobel’s wood construction acquisition, the production of the BASF products - which are mainly used to coat doors and windows used in the construction industry (joinery) - will be transferred from the BASF site in Münster to Akzo Nobel’s Decorative Coatings site in Cologne, Germany.

“This divestment of our ACE activities needs to be considered against the backdrop of our ambitious growth strategy for our core coatings activities, which will require considerable resources,” explained Rudy van der Meer, Member of Akzo Nobel’s Board of Management responsible for Coatings. “Our Joinery business has established a strong position in many European markets in recent years through the Sikkens brand and the BASF business fits in very well with the strategic objectives we have for this market.”

Subject to final agreement, the transactions will include dedicated technology and business know-how. Manufacturing facilities will not be included in the deals. Discussions with employee unions and representative bodies are ongoing and the consultation procedures will continue where applicable. The transactions will be subject to applicable merger control procedures.

Both companies expect to finalize the agreements by September 2004.