Chemical giant BASF SE has made a $5.5 billion cash offer to buy Swiss specialty chemical maker Ciba Holding AG to become a leading supplier in paper chemicals business.
MUMBAI: Chemical giant BASF SE has made a $5.5 billion cash offer to buy Swiss specialty chemical maker Ciba Holding AG to become a leading supplier in paper chemicals business. It is currently world number four in plastic additives and paper chemicals and would become number one after the acquisition.
BASF expects to finalise the transaction in the first quarter of 2009. The offer is 60% premium to the 30-days average stock price of Ciba Holding.
Although BASF India shares slide 2% to Rs 266, it outperformed the broader market, where the key indices fell over 3%.
Ciba India stock closed 5.6% up at Rs 248 on expectations of an open offer.
BASF, from its two subsidiaries, namely, BASF Societas Europaea and BASF Aktiengesellschaft owns 52.69% in BASF India, and Ciba Holdings owns 58.28% in CIBA India.
An official from the Indian office of BASF said, “Any offer for the Indian shareholders of Ciba is not clear at this point in time as this offer is the first step in acquiring the company. Acquisition will be completed after Ciba Holdings’ shareholders approve the proposal during the AGM.”
Analysts believe that BASF is paying a high price for the deal.
“Pigment is a common business between the two and BASF will definitely derive a lot of value from this deal. However Ciba’s valuation arrived by BASF is too high and could have been lower,” said an analyst.
Ciba’s 2007 sales were Swiss Franc 6.5 billion, of which 27% came from Asia. Ciba has suffered from falling margins as it has struggled to pass on higher raw material costs to customers.
“With this acquisition we would be offering a complete portfolio to our customers worldwide and will elevate BASF to a global leadership position,” said Jürgen Hambrecht, chairman, BASF SE during a conference call with the media.
Hambrecht said that the paper industry is going through a tough phase. Market growth is low, and the cost of wood fibers and energy are increasing. He said that restructuring is important to improve profitability.
shubhashish@dnaindia.net
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}