BASF to buy Switzerland's Ciba
Monday September 15, 11:14 am ET
By Matt Moore, AP Business Writer
BASF to buy Swiss specialty chemicals maker Ciba for about $5.35B
FRANKFURT, Germany (AP) -- BASF SE said Monday that it would buy Swiss specialty chemicals maker Ciba Holding for about $5.35 billion in cash -- a move that augments the German company's presence worldwide.
BASF, one of the world's biggest makers of chemicals, will pay 50 Swiss francs ($44) a share for Basel-based Ciba -- a total of 6.1 billion Swiss francs. It said the Swiss company's board had approved the move.
"With the acquisition of Ciba, we are strengthening our portfolio and expanding our leading position in specialty chemicals with products and services for a variety of customer industries, in particular the plastics and coatings industries as well as water treatment," BASF chief executive Juergen Hambrecht said.
"In the current consolidation phase in the chemical industry, the acquisition of Ciba offers clear advantages in terms of global competition," he added.
He said the deal would extend BASF's position as a preferred supplier to the plastics industry and make it the second-largest supplier of coating effect materials. It would also see gains in plastics additives, including UV stabilizers and antioxidants.
With Ciba, BASF would also be able to offer a wider range of pigments, resins and additives.
Ciba CEO Armin Meyer said that the deal "combines a fair price with an industrially compelling solution" for the company.
"By joining with BASF and gaining access to its research, production and marketing platform, we will significantly strengthen Ciba's businesses, especially in the areas of plastics, coatings and paper," he said.
The announcement boosted Ciba shares by nearly 27 percent to 48.22 Swiss francs ($42.70) in Zurich. In Frankfurt, investors sent BASF shares down 4 percent to 36.29 euros ($51.35) amid concern that the German company may be offering too much.
"This acquisition smacks of 'have cash will spend it' for BASF," said James Knight, an analyst with Collins Stewart in London, who said that Ciba does offer some proprietary technology for BASF.
"However, Ciba also has deep structural issues over cost and location and no synergy target has yet been given," he said in a research note.
"Worryingly, BASF has also given assurances on strategically important production sites in Switzerland, which will be a big impediment to cost cutting."
Ciba employs 13,000 people worldwide and posted sales last year of 4 billion euros. Ludwigshafen-based BASF has 95,000 workers and posted sales of 57.9 billion euros in 2007.
BASF said it hopes to finalize the purchase in the first quarter of 2009.
The takeover offer period for Ciba is set to start Oct. 1 and last 20 days. The deal also requires regulatory approval from the Swiss Takeover Board and is subject to the tendering of at least 66.67 percent of Ciba shares and the removal of various takeover defenses in Ciba's statutes.
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