BASF on Track With Integration of Cognis

-- Synergies to generate euro 275 million of additional EBIT

-- One-time integration costs of euro 290 million expected

Mar 25, 2011, 11:30 ET from BASF Corporation

LUDWIGSHAFEN, Germany and FLORHAM PARK, N.J., March 25, 2011 /PRNewswire/ -- BASF today announced its integration plans for Cognis. BASF expects to achieve an additional EBIT of euro 275 million (10.6% of Cognis' 2009 net sales) through the integration. This consists of growth synergy targets to generate an additional EBIT of  euro 135 million by 2015 and cost synergies of around  euro 140 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 realized 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 euro 290 million, excluding an inventory step-up of euro 120 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."

Growth synergies of euro 135 million

The growth measures aim to generate an additional EBIT of around euro 135 million by 2015. They include leveraging the extended customer base, the extended solution capabilities and innovation capabilities as well as the regional setup of the combined business.

Cost synergies of euro 140 million

The cost synergies of around euro 140 million (5.4% of Cognis' 2009 net sales) will be achieved by the end of 2013. Main drivers are the combination of procurement activities, the consolidation of administrative structures, the improvement of production efficiency as well as the consolidation of the IT landscape.

Future site footprint and concept for North America

BASF plans to maintain 26 of the 28 Cognis production sites. Hythe, UK, will be sold. For Tromsoe, Norway, future strategic options will be evaluated. Of Cognis' 37 non-production sites, 26 will be consolidated with existing BASF sites or exited, nine will remain and two are still under review.

In North America, BASF will maintain the manufacturing sites of Cincinnati, Ohio; Kankakee, Ill.; Mauldin, S.C.; Pasadena, Texas; and Ecatepec, Mexico. The site in Tucson, Ariz., will remain as a Technology Center and also will become the North American hub for the Performance Chemicals Mining business. Cognis' former North American headquarters in Cincinnati, along with the office and lab sites in Ambler, Pa.; LaGrange, Ill.; and Mississauga, Canada, will close. Many positions will be relocated to other BASF North America sites. Full closure of the non-production sites is expected to occur by the middle of 2012.

"We will continue to focus on our customers' needs and put the highest priority on ensuring that there are no business disruptions of any kind during the integration process," said Feldmann. "In order to maintain high customer satisfaction in the course of the process and system changes within the integration we have already started to implement various measures in close cooperation with our customers."

BASF announced its plans to acquire Cognis in June 2010 and completed the acquisition in December 2010. The equity purchase price was euro 700 million. Including net financial debt and pension obligations, the enterprise value of the transaction was euro 3.1 billion.

BASF - The Chemical Company

BASF Corporation, headquartered in Florham Park, New Jersey, is the North American affiliate of BASF SE, Ludwigshafen, Germany. BASF has approximately 16,400 employees in North America, and had sales of $17.7 billion in 2010. For more information about BASF's North American operations, visit

BASF is the world's leading chemical company: The Chemical Company. Its portfolio ranges from chemicals, plastics, performance products, and agricultural products to oil and gas. As a reliable partner, BASF creates chemistry to help its customers in virtually all industries to be more successful. With its high-value products and intelligent solutions, BASF plays an important role in finding answers to global challenges, such as climate protection, energy efficiency, nutrition and mobility. BASF posted sales of more than euro 63.9 billion in 2010 and had approximately 109,000 employees as of the end of the year. Further information on BASF is available on the Internet at or in the Social Media Newsroom at

SOURCE BASF Corporation