Germany-based BASF will buy Cognis from its owners—the US investment bank Goldman Sachs and the UK private equity group Permira—at an equity purchasing price of €700 million.
BASF said that it expects the household products additives maker to help it weather economic turbulence. BASF's core chemicals and plastics business currently relies on industries such as automotive and construction, both of which have been hit hard by the global economic crisis.
Germany-based Cognis makes additives for cosmetics and detergents, and specialises in products that use natural ingredients, such as raw materials from palm trees, coconut and corn. Such products would sell well through BASF's existing marketing channels, with analysts suggesting a takeover would also coincide with a recovery in consumer goods markets.
The deal will boost BASF’s efforts to diversify away from oil-based products into more environmentally friendly and higher margin products.
BASF is planning to integrate Cognis into its performance products segment, which made revenues of €9.4 billion in the past year. Performance products give special characteristics to everyday products, for example, vitamins for food supplements and UV filters for sunscreen.
Commenting on the deal, Jürgen Hambrecht, chairman of BASF, said: “With the acquisition of Cognis, we are strengthening our portfolio with cyclically robust and profitable businesses and further expanding our position as the world’s leading chemical company.”
John Feldmann, member of the board and responsible for the Performance Products segment at BASF, said: “With this acquisition, we want to achieve a leading position in personal care ingredients, strengthen our leading position in value added products for home care and establish a strong position in health and nutrition products.
“By purchasing Cognis, we will in particular expand our portfolio with products based on renewable raw materials. A broader and more attractive offering of products and services combined with our research and development expertise will allow us to become an even more important partner for joint development projects with our customers.”
BASF's annual sales are expected to grow more than 75 per cent to above €90 billion by 2020, helped by takeovers such as the Cognis deal and the expansion of its core chemicals operations.
Headquartered in Ludwigshafen, Germany, BASF posted sales of more than €50 billion in 2009 and had approximately 105,000 employees as of the end of the year.
Headquartered in Monheim, Germany, Cognis was created in 1999 from the chemicals business of Henkel, one of the leading German producers of consumer goods. It had sales of around €2.6 billion and 5,600 employees in 2009. It operates production sites and service centres in 30 countries.
