March 29, 2011

BASF announces integration plans with Cognis

BASF expects to achieve an additional EBIT of EUR275 million (US$387 million) (10.6% of Cognis's 2009 net sales) through the integration with Cognis.

This consists of growth synergy targets to generate an additional EBIT of EUR135 million (US$190 million) by 2015 and cost synergies of around EUR140 million (US$197 million) which will be achieved by the end of 2013.

To achieve the growth targets 230 additional jobs will be created worldwide, mainly in the Care Chemicals division. At the same time, BASF plans to reduce 680 positions due to overlaps in functional and administrative units as well as measures to improve efficiency. This means an overall reduction of 450 positions in the BASF Group, most of which will be realised by the end of 2012. The employees will be offered a suitable position within BASF whenever possible.

By the end of 2013, BASF expects one-time integration costs of around EUR290 million (US$409 million), excluding an inventory step-up of EUR120 million (US$169 million) in 2010/2011. The integration will already be accretive as of 2012, less than two years after the acquisition.

"We see great potential for profitable growth in our Performance Products segment," said Dr. John Feldmann, member of BASF's Board of Executive Directors, responsible for BASF's Performance Products segment and the Cognis integration. "Through the acquisition, we have strengthened our activities in attractive growing markets such as personal and home care, nutrition and health, coating additives, synlubes and mining chemicals. The businesses complement each other excellently and allow us to offer our customers a comprehensive portfolio of products and solutions from both renewable and petro-based chemistry."

"Over the past months, the joint integration teams have identified growth areas and defined cost synergies and worked out the plans to successfully integrate Cognis into the BASF Group," said Michael Heinz, BASF's Global Integration Manager for Cognis. "We will now work on implementing these measures to create additional value for our customers and for our company. We aim to complete the major parts of the structural integration by the end of 2011."