RAG-time for Degussa

The international German mining and technology group RAG is to be the new owner of Germany's third-largest chemical company, Degussa, following news on Tuesday that the European Commission has approved the acquisition.

Competition concerns were initially raised in the construction materials sector because the Commission's investigation showed that the combination of RAG's and Degussa's activities could have led to the creation of a dominant position in the field of input products for concrete admixtures - products designed to influence the viscosity and water content of concrete to make it more workable.

In a bid to alleviate these competition concerns, RAG offered to divest its Naphtalene Sulfonate (NSF) business in the EU, a significant concrete admixture input product, including production plants in Italy, Spain and Germany. The Commission is satisfied that these commitments will eliminate the overlap of RAG's and Degussa's activities and will enable a viable new competitor to be created in order to remedy the removal of Degussa as an independent supplier.

Last week Degussa claimed that the transformation of the group into a purely speciality chemicals company was practically complete. The equivalent of about 90 per cent of the total sales of non-core operations has been sold, with proceeds so far totalling €3.7 billion. The group is aiming to use these funds to expand growth areas within speciality chemicals and to reduce debt. Evidence of growth arrived this week when the company announced that it had founded a holding company in Beijing - Degussa (China) Holding - to expand the group's activities in the Chinese region.

Degussa​ is currently 64 per cent owned by the German utility group E.ON and generated operating profits (EBITA) of more than €1 billion in 2001.