German chemical giant BASF plans to acquire Swiss specialty chemical maker Ciba Holding AG, for approximately €3.8 billion deal that has the backing of the Ciba board.
BASF will make a public takeover offer to Ciba's shareholders and will pay CHF 50.00 in cash for each nominal share in Ciba, the former specialty-chemical operations of Ciba-Geigy.
The offer corresponds to a premium of 32 per cent above the closing price for Ciba's shares on 12 September 2008 and a premium of 60 per cent above the volume-weighted average share price for Ciba shares in the 30 days prior to announcement of the public takeover offer.
Ciba's enterprise value would be CHF 6.1 billion (approximately €3.8 billion) based on all outstanding Ciba shares and including all net financial liabilities and pension obligations.
Analysts say the acquisition could help BASF improve efficiencies against the backdrop of higher raw-material costs and increasing competition.
BASF's offer is also subject to an acceptance rate of at least 66.6 per cent of the voting rights and expects to finalize the transaction in the first quarter of 2009.
The offer prospectus is scheduled to be published on October 1, 2008 following the approval of the offer by the Swiss Takeover Board and later extension valid for 20 trading days plus an obligatory extension of 10 trading days.
''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. In paper chemicals, we will intensify the urgently needed restructuring process and become the leading supplier with an extensive portfolio. We will grow profitably in accordance with our clear and successful strategy. The transaction meets our acquisition criteria. We expect that it will make a positive contribution to earnings per share in the second year,'' said Dr. Jürgen Hambrecht, Chairman of the Board of Executive Directors of BASF SE. ''Our attractive cash offer gives Ciba shareholders the opportunity to realize the full value of their investment plus a high premium immediately,'' he added.
''We recognise 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. Ciba has a leading market position, in particular with its portfolio of plastics additives and coating effect materials, and offers its customers significant benefits, '' continued Hambrecht. ''The integration of Ciba's 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. The precondition for this is to rigorously improve operational excellence. ''
Hambrecht stressed, ''We look forward to working with Ciba's highly committed executives and employees. We offer the company and its employees a new home with a long-term, viable perspective. Basel will remain an important site for parts of the combined business, in particular research, and we 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. 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 Dr. Armin Meyer, chairman of the board of Directors of Ciba. ''Ciba's businesses will be strengthened substantially thanks to integration into BASF's Verbund and the access to BASF's 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. The acquisition of Ciba by BASF will provide a long-term perspective for profitable growth of the Basel operations in particular and our other businesses around the world
Hambrecht said that in the current consolidation phase in the chemical industry, the acquisition of Ciba offers clear advantages in terms of global competition.
BASF also announced that Ciba's home town Basel and its surroundings would remain an important research and development center as well as production sites in Switzerland.
This acquisition will help BASF to get greater efficiency due to economies of scale and result in being a leading supplier of chemicals for the paper industry, a preferred supplier to the plastics industry and second-largest supplier of coating effect materials offering a wide range of product portfolio in the industry with a global reach.
BASF is considering repositioning and restructuring of paper chemicals operations to create leading supplier with extensive portfolio.
In addition, the planned acquisition would strengthen BASF's presence in fast-growing emerging countries and improve its market position in important industries such as automotive, packaging, construction, electronics and water purification.
The integration in BASF's Verbund, Ciba's businesses in niche markets such as oil and mining would benefit from wider market access and BASF's extensive application
BASF in its business segments, posted sales of €58 billion in 2007 and has around 95,000 employees in five continents. The company supplies products of its 14 operating divisions to a variety of international business partners in over 200 countries..
On September 4, 2008 BASF was declared as the leading chemical company in the Dow Jones Sustainability World Index (DJSI World). BASF was recognized for its climate strategy, its environmental and social reporting and for developing innovative and eco-efficient products. The DJSI World is the most important sustainability index and represents the top 10 percent of the largest 2,500 companies in each industry in the Dow Jones Global Index.
Ciba is focused in three market-focused segments - Plastic Additives, Coating Effects and Water & Paper Treatment. It caters to several major markets including the Automotive, Packaging, Home & Personal Care, Paper and Printing, Construction, Electronics, Water Treatment and Agriculture industries.
Ciba, headquartered in Basel, Switzerland employs more than 13,000 people worldwide and is active in more than 120 countries around the world.
In 2007, the Ciba generated sales of CHF 6.5 billion from continued operations and invested over CHF 260 million in R&D.
Ciba became independent in January 1997, having been formed from the specialty chemical operations of the former Ciba-Geigy Limited when it merged with Sandoz Limited to form Novartis AG