Lone Star has entered exclusive negotiations to buy BASF's construction chemicals business as the German chemicals company seeks to focus on more profitable operations, people close to the matter said.
The private equity firm vied with a consortium comprising buyout groups Cinven - which owns peer Chryso - and Bain for the world's largest maker of chemical additives for concrete, they said.
A BASF spokesman confirmed that the company had proceeded to talk with only one bidder but declined to comment further. Lone Star declined to comment.
Financial details of the potential deal have not emerged, but sources close to the matter have said in the past that they expect the unit to be valued around 3 billion euros ($3.3 billion). The sale has been long and drawn out as BASF put the business on the block a year ago.
BASF's CEO Martin Brudermueller said in October that he expected the signing of a deal before the end of the year.
"We received confirmatory bids and are now progressing with a smaller number of interested parties," he said at the time. The chemicals giant had initially hoped to sell the unit to the world's largest cement maker LafargeHolcim, but was unable to hammer out a deal.
Lone Star had previously walked away from the bidding but was invited back to the negotiating table, sources have said. BASF's construction chemicals unit is the world's largest maker of additives for concrete. It also offers a range of substances including concrete repair fillers, grouts and sealants under a business dubbed Construction Systems, where BASF is the No. 4 player globally.
The business, whose products have been used to build train tunnels in London and the Swiss Alps, competes with GCP Applied Technologies , Mapei, RPM Inc and Sika. Analysts have said that BASF never managed to reconcile the construction chemicals unit's dependence on small to mid-size builders with BASF's focus on large industrial customers.
BASF purchased the construction chemicals business from Degussa in 2006 for 2.7 billion euros including debt. Lone Star has German building materials maker Xella in its portfolio, while Cinven owns smaller French peer Chryso and Bain owns British building materials distributor MKM.
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