BASF puts steel coatings business on the block - sources

(Refiles to include attribution in headline; also repeats to additional Reuters clients)

By Alexander Hübner and Arno Schuetze

FRANKFURT, Nov 5 (Reuters) - BASF is putting its steel coatings business up for sale, in a deal that could value the business at up to about 500 million euros ($540 million), several people familiar with process said.

BASF, the global chemical industry leader by sales, has said it was ready to seek new owners for businesses that have come under too much pressure from low-cost rivals. It (Other OTC: ITGL - news) is currently splitting off its pigments business to potentially prepare it for a sale.

The so-called coil coatings business - which BASF is now putting on the block with the help of HSBC - makes coatings for steel and aluminium bands that are processed into facades, refrigerators, window blinds and a wide range of industrial products.

Two of the sources said the asset generates 60-70 million euros in earnings before interest, taxes, depreciation and amortisation (EBITDA) and could fetch about 8 times that much.

BASF and HSBC declined to comment.

Unlike BASF's much larger automotive coatings business, the coil coatings business is seen as lacking critical mass and a competitor such as Akzo Nobel (Amsterdam: AKZA.AS - news) , PPG Industries (NYSE: PPG - news) or unlisted Beckers Group could seize the deal opportunity to bulk up, industry experts said.

BASF has opened the unit's books to five industrial players that are taking an interest in buying, one of the sources said.

The business is part of BASF's 3 billion-euro coatings unit, which derives 77 percent of its sales from automotive customers, a market where it is the second or third-largest globally.

In coil coatings, BASF says it is No. 3 in Europe.

($1 = 0.9198 euros) (Writing and additional reporting by Ludwig Burger)