Carlyle receives green light for €7.7 billion acquisition of BASF Coatings business

Compass Lexecon advised investment firm The Carlyle Group (‘Carlyle’) with its acquisition of BASF’s Coatings business. The transaction was under investigation by the European Commission, which looked into to the vertical supply relationship between the parties, as Carlyle’s subsidiary Nouryon Chemicals produces an essential ingredient for aerospace sealants that BASF manufactures. The European Commission conditionally approved the deal in early June 2026.

Situation

In October 2025, Carlyle and BASF reached a binding transaction agreement regarding the acquisition of sole control of BASF Coatings by funds managed and/or advised by Carlyle.

BASF Coatings is a global player in the development, production and marketing of automotive coatings, industrial surface treatments for metal, plastic and glass substrates in various industries, and coatings and sealants for aerospace original equipment manufacturers. Carlyle is a global investment firm, with portfolio companies in different sectors. Carlyle also owns Nouryon Chemicals, a specialty chemicals company supplying polysulfides which are essential for the production of sealants in the aerospace industry.

Our role

Compass Lexecon assisted Carlyle and its external counsel Latham & Watkins with the merger proceedings before the European Commission. Our work was mainly related to the vertical supply relationship between the Parties, as Carlyle’s subsidiary Nouryon produces polysulfides that are used by BASF and others in the manufacturing of aerospace sealants. We analysed the competitive landscape in both the upstream aerospace polysulfides production and downstream aerospace sealants manufacturing markets, and calculated market shares across both levels of the supply chain within the EEA and globally. We also assessed the merged entity's ability and incentive to engage in input foreclosure of downstream rivals producing aerospace sealants, including developing a quantitative model to evaluate the incentives for partial foreclosure of competing aerospace sealants manufacturers under different scenarios.

Outcome

The European Commission conditionally approved the transaction in early June 2026.

The team

The Compass Lexecon team was led by Lorenzo Coppi and Roman Fischer, including Alessia Paulicelli, Matthias von Loewenich, Mudit Dhakar, and Jan-Torben Fricke.

They assisted Carlyle’s counsel Latham & Watkins LLP, led by Luca Crocco and supported by Nils Bremer, Lorenzo Sacco, Anne-Claire Théry and Maria Zarro.