FOCUS: BASF aims for growth with Engelhard bid

03 January 2006 20:00  [Source: ICIS news]

BASF seeks to expand into catalyst market By Joe Chang

NEW YORK (ICIS News)--BASF plans to expand into the fast-growing catalyst market and strengthen its position in specialty pigments with its hostile $4.9bn (Euro4bn) takeover bid for Engelhard.

“BASF already has significant expertise in catalysts and we view this market as being highly attractive, with significant growth potential,” said BASF chairman Jürgen Hambrecht in a conference call with the financial community and media on Tuesday. “BASF will leverage its existing knowledge and strong relationships in key industries such as automotive, as well as its strong global position, to accelerate growth in this business.”

BASF plans to merge its catalyst business with Engelhard’s to create a global catalysts business division headquartered in New Jersey.

Along with catalysts, BASF sees growth synergies with Engelhard’s pearlescent pigments business, which is the number two player globally.

“The pearlescent pigments business, in addition to achieving high, stable margins, offers a number of cross-selling opportunities for BASF’s performance products business,” said BASF chief financial officer Kurt Bock. Engelhard’s appearance and performance technology business, which is primarily pigments, would be combined with BASF’s performance products businesses.

BASF views the acquisition as a growth enhancer and said cost synergies will likely be limited.

Shares of Engelhard surged $8.06 to $38.21, beyond BASF’s conditional $37/share offer in Tuesday afternoon trading. BASF said it would consider increasing its offer by $1 if Engelhard agrees to provide further information to justify a higher price.

A BASF spokesman told ICIS news: “We’ve made some efforts to meet the management of Engelhard but these efforts have been rebuffed.”

The German group said it is prepared to meet with the Engelhard team to see whether Engelhard can demonstrate value in addition to that discernable from the publicly available information that might enable BASF to increase the price that it proposes to pay.

Engelhard’s business comprises four segments: environmental technologies, process technologies, appearance & performance technologies and materials science. The group recorded 2004 sales of $4.2bn.

(With additional reporting by Anna Jagger)


By: Joseph Chang
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