BASF snaps up Cognis for €3.1 billion

German chemical giant BASF said Wednesday it would buy the specialist company Cognis for a total of €3.1 billion.

BASF snaps up Cognis for €3.1 billion
Photo: DPA

Its latest acquisition will help BASF focus on high-margin sectors such as personal care products and cosmetics as it diversifies away from core gas, oil, and plastics activities.

BASF said it had agreed on terms of a sale with the owners of Cognis, investment fund Permira and US investment bank Goldman Sachs, based on an equity purchase price of €700 million.

“Including net financial debt and pension obligations, the enterprise value of the transaction is €3.1 billion,” a statement added.

BASF chairman Jürgen Hambrecht told a telephone news conference that the acquisition meant his group was “strengthening our portfolio with cyclically robust and profitable businesses and further expanding our position as the world’s leading chemical company.”

Cognis produces chemicals used in a broad range of products, from cosmetics to adhesives and lubricants.

It has 5,500 employees and posted sales last year of €2.6 billion.

Cognis is BASF’s biggest purchase since it bought the Swiss specialty chemical group Ciba last year for €3.8 billion.

“Cognis is a nice fit for BASF,” UniCredit analysts wrote in a research note.

They said Cognis was the leading producer of surfactants used in detergents, and that it “has a strong global footprint” especially in Asia.

BASF added that the deal should help it become a major supplier of products based on renewable raw materials.

The German giant wants to finalise its purchase by the end of November, and expects integration costs of €200-250 million by the end of 2012.

Overall annual savings of at least €130 million should be reached by 2013, the group added, without specifying if it planned major job cuts.

The deal should boost BASF sales, which would have reached €48.7 billion last year if Cognis’ results were included.

BASF shares gained 1.26 percent to €47.33 in afternoon trading on the Frankfurt stock exchange, while the DAX index of German blue-chips was 0.20 percent lower overall.

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German chemical giant BASF to make car battery parts near Tesla Berlin site

German chemical giant BASF says it will build a factory making key components for electric car batteries in Brandenburg state, not far from Tesla's first European "Gigafactory" just outside Berlin.

German chemical giant BASF to make car battery parts near Tesla Berlin site
Photo: DPA

Set for a site in Schwarzheide, 100 kilometres (62 miles) from the planned Tesla plant, BASF's factory “will produce cathode active materials with an initial capacity enabling the supply of around 400,000 full electric vehicles per year,” the company said in a statement.

It did not immediately say how many jobs would be created.

The Brandenburg unit will work in tandem with a plant in Finland producing precursors for the cathodes, the part of a battery cell that passes current to the rest of the electrical circuit.

Both are scheduled to come online in 2022.

READ ALSO: Protests as Tesla receives approval for factory purchase near Berlin

The project “is part of our first joint European project on battery cell production,” German Economy Minister Peter Altmaier said in a statement.

Several European Union member states, led by Germany and France, have offered billions in subsidies to build up an “Airbus of batteries”, seeing the globally competitive pan-European aircraft builder as a model for future industries.

Batteries make up around 40 percent of the value of an electric car, but are currently made by companies in South Korea, China and Japan.

Although Europe's industrial giants fear for their business models built in the combustion engine age, none was prepared to take the plunge into cell-making without government help.

Across Germany in Kaiserslautern, France's Peugeot now plans a two-billion-euro ($2.2 billion) battery cell production site that will supply batteries for up to 500,000 vehicles a year by 2024.

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