BASF makes billion dollar offer for Ciba

By Guy Montague-Jones

- Last updated on GMT

Related tags Chemical industry Ciba

BASF has announced plans to acquire rival firm Ciba for €3.8bn in a move that will extend significantly its range of products for the plastics and coatings industries.

Consolidation is underway in the chemicals industry as rising costs put pressure on smaller firms and big companies search out the higher margins offered by specialty chemical products.

Attracted by the higher margins offered by specialty products, Dow Chemical bought Rohm and Haas in July for $18.8bn.

Now, BASF is looking to extend its presence in specialty chemicals by taking over Ciba in a deal that has been accepted by the company’s board of directors and is being recommended to shareholders.

Potential benefits

“In the current consolidation phase in the chemical industry, the acquisition of Ciba offers clear advantages in terms of global competition,”​ said Dr. Jürgen Hambrecht, chairman of the board of executive directors of BASF.

“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.”

BASF said the acquisition would extend the company’s position as a preferred supplier to the plastics industry and make the German-based firm the second largest supplier of coating effect materials.

The companies will also benefit from additional synergies in other industries and be able to complement each other with regard to research and development.

Financial concerns

Despite these potential benefits Hambrecht admitted that were concerns over Ciba’s current financial health.

“We recognize the strength of broad areas of Ciba’s portfolio, even if the company’s performance has disappointed analysts and investors, especially in the second quarter of 2008,”​ said Hambrecht.

However, Ciba chairman, Dr. Armin Meyer, welcomed the deal. He said: “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.”

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