Ludwigshafen, Germany -- BASF is assessing the future of its underperforming leather and textile chemicals business, as it reorganises to incorporate the Ciba business that it is in the process of buying. The group said a joint venture or sale of the leather and textile chemicals units are possibilities, following low growth in a fragmented, highly competitive market for several years.
In its Performance Products segment, where most of the current reorganisation will occur, BASF said it now aims for more focus on customer industries.
BASF expects the Ciba transaction to close over the first quarter of 2009, and the two groups will then work to develop an optimal structure for the combined operations. Integration will then start in the second half of 2009, BASF said.
"With these initial steps, we are very clearly focusing our business on the needs of our customers and markets and sharpening the profile of the segment's divisions. At the same time, we are creating the conditions that we need to integrate the new Ciba businesses rapidly and efficiently in the next step, " said Dr John Feldmann, the BASF board member responsible for Performance Products.
BASF's Performance Products division currently consists of Acrylics & Dispersions, Care Chemicals and Performance Chemicals: from 1 April 2009, a new Paper Chemicals division will be added, with Ciba's paper chemicals division to be added to this later.
The Acrylics & Dispersions division will be renamed Dispersions & Pigments, and will combine all BASF's raw materials for the coating and paint industry.
In future, Performance Chemicals will aim to offer specific solutions for a broad range of industries including plastics processing, automotive, refineries, oil fields and mining, as well as leather and textiles. Ciba's plastics additives business, which includes its protective additives for the polyurethane sector, will join this division.
In its struggling leather and textile chemicals operations, BASF will further restructure to increase efficiency, which it said will reduce costs by €25 million by 2011.These markets have shown low growth and high competitive pressure, which has continued despite strong measures to improve competitiveness, said the chemicals giant.
Strategic options for these businesses include a joint venture or the complete sale of the business: "The market requires this step not just because of the fragmented supplier structure and the low market growth," commented Reiners.
BASF has production plants for leather and textile chemicals in Germany, Spain and Turkey, as well as in Brazil, India and China. The business employs about 1300 people, and had global sales of about €400 million in 2007. Leather finishing uses a range of coatings, many of which are polyurethane-based.