By Natascha Divac

FRANKFURT--Germany's BASF SE (BAS.XE) said Wednesday it plans to shift its pigments activities into a new independent legal entity.

The company's pigment activities generated sales of about EUR1 billion ($1.08 billion) in 2014 with 2,500 employees worldwide.

In the second half of 2016, BASF intends to carve out its pigments business and establish separate legal entities, the company said.

"By creating an organization fully dedicated to pigments, we will adapt better to the challenges in the pigments industry," said Alexander Haunschild, senior vice president of the regional business unit Pigments and Resins Europe and appointed head of the new global business unit.

BASF's pigments business serves a variety of industries including paints & coatings, printing & packaging and plastics.

The new business unit will likely be headquartered in the Ludwigshafen area and all employees who are dedicated to the pigments business will be transferred to the new unit, BASF said.

Write to Natascha Divac at natascha.divac@wsj.com

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