(Yicai Global) May 21 -- BASF plans to purchase a 51 percent stake in Hunan Shanshan Energy, a leading Chinese supplier of cathode active materials used in electric car batteries, for CNY1.7 billion (USD264.5 million), the German chemicals major said.

Taking control of Shanshan Energy will make up for a capacity shortage in BASF's lithium battery cathode active materials business, the Ludwigshafen-based firm said yesterday. The company has committed to increasing its global production of the material to 160,000 tons by the end of next year.

The purchase will be done in cash and will leave original controlling shareholder Shanshan Group with a 49 percent stake, it added. The deal is expected to be closed this summer pending regulatory approval, it added.

“By combining BASF’s and Shanshan Energy’s expertise, we will accelerate the electrification transformation of the transportation industry,” said Markus Kamieth, member of the board of executive directors of BASF.

Through the cooperation with BASF, Shanshan Energy will further enhance its competitiveness in the Chinese market and accelerate the company’s integration into the global market by providing high-quality services and products to customers in China and around the globe, said Zheng Yonggang, chairman of Shanshan Group.

Ningxiang-based Shanshan Energy operates four production bases in central Hunan and northwestern Ningxia provinces with an annual production capacity of around 90,000 tons.

Editor: Kim Taylor