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Integration of Ciba: BASF specifies restructuring plans

23 of 55 acquired production sites worldwide under review

07-Jul-2009

BASF has finalized its plans for the integration of Ciba Holding AG, which it acquired in April 2009. Under the plans, former Ciba businesses are to be integrated into the operating divisions in BASF’s Performance Products segment where their potential can best be realized and developed. The integration will involve extensive restructuring measures that BASF expects to generate synergies of at least €400 million per year from 2012 onward. By the end of 2010, savings of approximately €300 million are to be achieved. At the same time, the integration process is expected to entail cash costs totaling approximately €550 million, about €150 million thereof in 2009. BASF will report details of non-cash integration costs as part of its second-quarter interim reporting on July 30, 2009.

The restructuring plans include a reduction of approximately 3,700 positions by 2013, the majority of which will be eliminated by the end of 2010. BASF is reviewing strategic options - including restructuring, sale or closure - for 23 of the 55 former Ciba production sites worldwide. Decisions will be made about these sites by the end of the first quarter of 2010. The remaining 32 production sites are to be optimized as part of BASF’s global production network or restructured. By the end of 2010, BASF also aims to consolidate 36 of the former Ciba’s 70 sales and administrative offices and research sites with existing BASF activities.

As already announced, the company will retain a strong presence in the Basel region. BASF’s new Paper Chemicals division, formed in April, and the two associated business units Coatings & Starch Europe and Wet End Chemicals have been based in Basel since July 1, 2009. In addition, the European business unit for plastic additives and the global units for technology management and the restructuring of the pigments business have been relocated to the former headquarters of Ciba Holding AG in Basel. BASF is also establishing a new Business Center Switzerland in Basel that will function as a service platform for sales, finance, human resources and other activities in Switzerland. A BASF research center will be based in Basel as well.

BASF aims to implement restructuring measures in a socially responsible manner and has begun talks with local employee representatives. “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 optimize 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.”

Key elements of the integration are:

- Ciba’s and BASF’s paper businesses will be bundled and restructured within the newly formed Paper Chemicals division.

- All Ciba’s coatings effects activities are to be integrated into BASF’s Dispersions & Pigments division, which is organized in regional business units.

- Ciba’s plastic additives business will be integrated into the Performance Chemicals division. This will extend BASF’s portfolio to cover important product segments such as UV stabilizers and antioxidants.

- The majority of Ciba’s water treatment business will be integrated into the Performance Chemicals division. A strategy for the water treatment business will be developed by 2010.

- Ciba’s Home & Personal Care business will be integrated into the existing structure of the Care Chemicals division.

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