BASF acquires Ciba
Deal worth $5.5 billion will advance BASF's quest for specialty chemical operations
Germany-based BASF announced last week it had completed its $5.1 billion cash acquisition of Ciba, a specialty-chemicals company based in Switzerland.
The impact of the tie-up on the Newport facility, which employs about 200, is still unclear. The facility produces two different types of red-shade pigments, used in auto paint, fibers, inks and plastics. It also houses business functions including sales and marketing
, technical support and process development, jobs that could be threatened by the BASF acquisition.
"There's definitely an uncertainty at Ciba right now, big-time," said a former technical services employee at the Newport facility.
The pigment plant was built in 1902 by Henrik Krebs, owner of Krebs Co., who made a white pigment called lithopone. DuPont Co. bought the plant in 1929, producing pigments there for the better part of the century before selling it to Ciba-Geigy Corp., which would later become Ciba Specialty Chemicals Corp. The company employs more than 13,000 worldwide.
Ciba completed an eight-year, $180 million modernization program in 2000 to improve the Newport plant's environmental performance and open two new production facilities. The plant, one of Ciba's four major U.S. production facilities, makes pigments used in a number of industries and products -- including red, violet, magenta and gold paints for cars.
When BASF announced in September that it would buy Ciba, the deal was the latest in a string of chemical-industry mergers.
It followed two other industry deals with local connections -- Ashland's acquisition of Wilmington-based Hercules, and Dow Chemical's purchase of Philadelphia-based Rohm & Haas, which owns an electronics-materials plant in Newark.
Like those acquisitions, the BASF-Ciba deal was designed to diversify the acquiring company's portfolio of products, moving them away from basic commodity chemicals, which are vulnerable to swings in the economy, to more stable specialty chemicals.
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BASF Chief Executive Juergen Hambrecht said when the deal was announced that the Ciba acquisition would give the company a leading market position in coating effects materials -- which include pigments -- as well as plastic additives and paper chemicals.
"As a No. 1 or 2 in all three businesses, we will be able to operate more efficiently and reach customers more effectively in the future," Hambrecht said.
But the process of integrating the two companies is in the beginning stages. To satisfy antitrust regulators, BASF has to sell certain Ciba facilities used to make yellow and blue pigments.
BASF, which had sales equivalent to more than $91 billion in 2008, said last week that it is beginning a "discovery phase" during which BASF and Ciba employees will analyze the acquired businesses.
"We expect we'll find out what is the best combination of the businesses," said BASF spokeswoman Anna-Maria Diefenthal. The integration of the companies will start in July.
BASF's own pigments business is part of its performance products segment, which had sales of about $13 billion in 2008. BASF, which employs more than 15,000 workers in North America and 97,000 globally, is trimming jobs and cutting production in response to the global recession.
Meanwhile, Ciba shut down production at the Newport plant from Feb. 2 to March 2 as a result of the recession, which has battered industries that Ciba's products serve. The company has trimmed workers' schedules at the plant from 40 hours to 36 hours and laid off nine employees, a Ciba spokeswoman said.
Ciba's current employment of 200 at the Newport facility is down from 275 five years ago.
http://www.delawareonline.com/article/20090412/BUSINESS/904120317
