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BASF to Sell or Close 23 Former Ciba Facilities

July 8, 2009 - BASF said that it plans to sell or close 23 of 55 former Ciba Speciality Chemical production sites worldwide as it integrates its acquisition of the Basel, Switzerland-headquartered chemical producer.

BASF plans to cut 3,700 jobs as part of the process as it seeks to generate annual cost savings of EUR 400 million ($560 million) a year from 2012.

Savings of about EUR 300 million a year were expected by the end of 2010 when most of the job cuts will have been made, BASF said.

A decision on the production sites was expected by the end of the first quarter of 2010. The remaining 32 production sites would be optimized, absorbed into the BASF global network or restructured, BASF added.

BASF has already stated that it would retain a strong presence in Ciba’s home city. Its new paper chemicals division is headquartered there and two associated business units: Coatings & Starch Europe and Wet End Chemicals.

The European plastics additives business and units for technology management and restructuring of the pigments business have been relocated to the former Ciba headquarters. It has established a new Business Center Switzerland in Basel.

The job reductions represent about 28% of the former Ciba workforce of 13,000 although job cuts within BASF have not been ruled out, BASF said in a Reuters report.

"This is unfortunately not good news for some of our employees,” BASF CEO Jurgen Hambrecht said. “But the combined businesses can be successful in the long term only if we optimize them and exploit the full potential for synergies.”

The integration process is expected to cost EUR 550 million ($775 million) in cash, with about EUR 150m charged in 2009. Non-cash integration costs will be reported in the company’s second quarter financial report.

BASF closed its $5.1 billion acquisition of Ciba in April.

SOURCE: ICIS




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