BASF Poised to Make a Bid for Cognis
7 maggio 2010
BASF is at an advanced stage of talks to acquire Cognis and may make a bid for the company next week, German press reports say. This follows last month's news that BASF and Lubrizol have separately expressed interest to Goldman Sachs Capital Partners and private equity firm Permira, Cognis's owners since 2001, that they would be interested in buying the company. BASF has appointed financial advisors to assist with the potential transaction, sources say.
Financial Times Deutschland reported today that BASF's supervisory board has given the go ahead to bid for Cognis, citing people familiar with the situation. Analysts say an outright sale of Cognis, rather than the previously considered initial public offering (IPO) of shares, would be the right strategy for the owners. "Private equity companies do not generally hold on to assets for 10 years and, in the case of Cognis, would favor a sale to a strategic buyer, one analyst tells CW. The deal would be worth about €3 billion ($4 billion), reports say.
Cognis, whose sales last year reached €2.6 billion, is the former oleochemicals business of Henkel. It is active in care chemicals, nutrition and health, as well as functional products. Cognis's main competitors in Europe are Evonik Industries, Croda, which in the past acquired ICI's Unichema oleochemicals operations, and BASF. All have had discussions about buying Cognis, reports say. Cash-rich Solvay could also be interested, following the sale of its pharmaceuticals business and its quest to expand into areas with a lower CO2 footprint.
"I think it would make sense for BASF to buy Cognis," says Andreas Heine, an analyst with UniCredit Research (Munich). "This year is a good year for acquisitions in the chemical sector because earnings have recovered, companies are more confident and their balance sheets are very strong," he says. In the case of BASF, the company has done most of the work integrating Ciba Specialty Chemicals already, he says. Cognis's portfolio would fit well with BASF's, he adds. Cognis's products are derived mainly from natural ingredients, such as palm oil and go into high quality personal care products.
