The Germany-based company completed the acquisition of Ciba, for which it paid €3.8bn, back in April after receiving the go ahead from competition authorities.
Ciba will now be integrated into the operating divisions of BASF’s Performance Products segment and the company hopes to generate synergies of €400m a year from 2012 onwards.
Short term significant costs
However, in the short term the integration is going to be costly.
Total cash costs of about €550m are expected of which €150m is likely to be incurred this year.
In addition, 3,700 jobs will be cut before the end of 2013, and BASF stated the majority of these will be lost by the end of 2010.
“This is unfortunately not good news for some of our employees,” said BASF chairman Dr Jürgen Hambrecht.
“But the combined businesses can be successful in the long term only if we optimise them and exploit the full potential for synergies. I promise all our employees that we will keep the period of uncertainty as short as possible and will make decisions in a fair and transparent way,” he added.
Production plants closed
Furthermore, 23 of the 55 former Ciba production plants will be closed, sold or restructured and the remaining 32 will be integrated into BASF’s own production network.
Similarly, administrative, sales and research sites do not escape the aggressive restructuring plans either, with BASF announcing that by the end of July 2010 more than half of the former Ciba sites will be merged into BASF’s existing network.
As part of the integration, Ciba’s home and personal care division will be integrated into the existing structure of the care chemicals division of BASF.
In addition, the paper businesses of the two companies will be combined to become a new business division called Paper Chemicals.
Plastic additives business of Ciba will be integrated into BASF’s performance chemicals, extending the company’s portfolio to cover new and increasingly important product families such as UV stabilizers and antioxidants.