BASF SE will become a plastics additives powerhouse as a result of buying Ciba Holding AG.
BASF announced Sept. 15 it was making a 50 Swiss francs ($45.48) bid per share, a price that is 64.3 percent higher than the weighted average price over the previous 60 trading days. Total value of the offer, including Ciba's debt and pension provisions, is about SFr 6.1 billion ($5.55 billion).
Ciba has an impressive additives portfolio to go along with BASF's plasticizers and light-protection additive lines. Plasticizers are among the few additive types Ciba does not carry.
``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 Chairman Jurgen Hambrecht said in a news release.
Ciba said it has developed new additive forms to cut down on dust when they are handled.
BASF said plastics additives are fast-growing and highly profitable. It said it will expand its lineup by gaining important segments like ultraviolet-light stabilizers and antioxidants.
``In the current consolidation phase in the chemical industry, the acquisition of Ciba offers clear advantage in terms of global competition,'' Hambrecht stated.
Among other recent consolidation plans in the industry, Dow Chemical Co. said it will buy Rohm and Haas Co., a move that will expand Dow's plastics additives lineup.
BASF's additives portfolio might be limited, but the firm is strong in polymers, many of which require additives. Its stable includes nylon, polybutylene terephthalate, acetal, polysulfone, polyether sulfone, recycled PET, recycled nylon 6, polyurethane chemicals and thermoplastic polyurethane, a range of styrenics, plus expanded polystyrene and other plastic foams.
As well, BASF's polymers involvement includes catalysts for PE and PP production, acrylic monomers, functional polymers and chemical intermediates.
``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,'' Hambrecht said.
For the first six months of 2008, Ciba lost SFr 569 million ($517.6 million). It cited a slowdown in Europe, higher raw material and energy costs, and a hefty charge against its water and paper treatment businesses. In a financial report, it stated it planned acquisitions and joint ventures in the third quarter to strengthen its plastics additives and coating effects businesses.
``Against the backdrop of increasingly challenging conditions within our industry, this is a transaction that combines a fair price with an industrially compelling solution for Ciba,'' Ciba Chairman Armin Meyer said in a news release.
``Ciba's businesses will be strengthened substantially thanks to … the access to BASF's research, production and marketing platform,'' Meyer added. ``This applies particularly in the plastics, coatings and paper divisions.''
The two companies are longstanding suppliers and customers of each other.
Ciba, based in Basel, Switzerland, said its board is recommending that shareholders approve the transaction.
However, shareholder Bestinver Asset Management said the deal ``significantly undervalues'' Ciba. Bestinver, a Madrid, Spain-based financial services firm, holds 13.2 percent, or 8.84 million, of Ciba's shares.
``As long-term shareholders, Bestinver rejects the offer and has no intention to tender the shares at the current offered price,'' the firm said in a news release.
BASF of Ludwigshafen, Germany, said that among other conditions, the offer is based on obtaining at least 66.7 percent of the shares and the removal of takeover defenses in Ciba's statutes. The parties expect the deal to be consummated by the first quarter of 2009.
BASF SE, which changed its name this year from BASF AG, employs about 95,000 at about 100 major sites. Its annual sales are 57.9 billion euros ($83.4 billion). Last year, plastics accounted for 17 percent of total sales. In addition to plastics, its businesses range from oil and gas chemicals, performance products, agricultural products and fine chemicals.
Ciba employs about 13,000 at 60 locations. Its annual sales are about 4 billion euros ($5.76 billion).