BASF to Buy Ciba


BASF plans to acquire Ciba Holding AG via a public takeover offer to shareholders, bringing together two specialty chemical giants with products that include synthetic lubricants and base stocks, lube additives and many components used in lubricants, additives and metalworking fluids. The offer is 50 Swiss francs (U.S. $44.96) in cash for each nominal Ciba share, for a total value of about CHF 6.1 billion (U.S. $5.5 billion).

The total value is based on all outstanding Ciba shares and includes net financial liabilities and pension obligations. Ludwigshafen, Germany-based BASF and Basel, Switzerland-based Ciba have reached a transaction agreement in which Cibas board of directors supports BASFs offer and recommends its acceptance to Cibas shareholders.

According to BASFs acquisition presentation, Cibas lubricants and process additives business broadens BASFs existing product offering in automotive and industrial fluids. The presentation also stated that Cibas attractive niche businesses will be integrated into BASFs existing larger businesses.

BASF makes synthetic lubricants and base stocks such as polyalkylene glycols, and produces a number of chemicals used in lubricants, additives and metalworking fluids. They include polyisobutene, ethyleneamines, alkylethanolamines, polyetheramines, ethylene and propylene carbonate, carboxylic acids and polyalcohols. Ciba offers a wide range of additives, including antioxidants, antiwear agents, metal deactivators, corrosion inhibitors and pour-point depressants. Its process and lubricant additives business falls under the companys plastic additives segment.

Officials for both companies told Lube Report it was too early in the process to comment on specifics about the transaction. Because this is a public offer, the two parties are not allowed to talk about each others specifics, Ciba spokesman Dominik Marbet told Lube Report. They have to treat each other still as suppliers and/or competitors. Until the offer is accepted by the shareholders, he could not answer questions on possible synergies and strategies for the business segments.

We will not talk on any specific product as long as BASF is not the owner of Ciba, BASF spokesman Michael Grabicki echoed to Lube Report.

The companies said in their announcement it was also too soon to provide details on integrating the two companies, including the question of whether job layoffs will result from the transaction.

Jurgen Hambrech, chairman of BASF, said the acquisition of Ciba will strengthen his companys portfolio and expand its leading position in specialty chemicals, especially in the plastics and coatings industries as well as water treatment. It will also make it the leading supplier in paper chemicals.

We recognize the strength of broad areas of Cibas portfolio, even if the companys performance has disappointed analysts and investors, especially in the second quarter of 2008, said Hambrech. Ciba has a leading market position, in particular with its portfolio of plastics additives and coating effect materials, and offers its customers significant benefits. The integration of Cibas activities into BASF and the necessary further restructuring measures will give the businesses sustainable strength and offer them a long-term perspective for profitable growth.

Hambrech said Basel will remain an important site for parts of the combined business, in particular research, and BASF will establish a global operating division there. We are convinced that there is a good match between the cultures and traditions of our two companies, he said. BASF plus Ciba is a recipe for both consolidation and profitable growth.

Against the backdrop of increasingly challenging conditions within our industry, this is a transaction which combines a fair price with an industrially compelling solution for Ciba, said Armin Meyer, chairman of Ciba. Cibas businesses will be strengthened substantially thanks to integration into BASFs Verbund and the access to BASFs research, production and marketing platform. This applies particularly in the plastics, coatings and paper divisions. BASF is a long-standing customer and supplier of Ciba and well-acquainted with our people and our business.

BASF has more than 95,000 employees, and Ciba employs more than 13,000 worldwide.

Financing is in place for BASFs offer, with the offer period expected to begin Oct. 1. BASF expects to finalize the transaction in the first quarter of 2009 at the latest.

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