LUDWIGSHAFEN, Germany/FLORHAM PARK, NJ - BASF has announced its integration plans for Cognis. BASF expects to achieve an additional EBIT of EUR 275 million (10.6 percent of Cognis' 2009 net sales) through the integration. This consists of growth synergy targets to generate an additional EBIT of EUR 135 million by 2015 and cost synergies of around EUR 140 million that 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. Employees will be offered a suitable position within BASF whenever possible.
By the end of 2013, BASF expects one-time integration costs of around EUR 290 million, excluding an inventory step-up of EUR 120 million in 2010 and 2011. The integration will already be accretive as of 2012, less than two years after the acquisition.
Growth measures aim to generate an additional EBIT of around EUR 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 around EUR 140 million (5.4 percent 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 and the consolidation of the IT landscape.
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, OH; Kankakee, IL; Mauldin, SC; Pasadena, TX; and Ecatepec, Mexico. The site in Tucson, AZ, 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, IL; 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.
BASF Announces Integration Costs for Cognis Acquisition
April 3, 2011