Germany′s BASF Prefers Friendly Takeover of US Firm | Business| Economy and finance news from a German perspective | DW | 06.01.2006
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Germany's BASF Prefers Friendly Takeover of US Firm

Germany's BASF -- the world's largest chemical company -- has made an offer for a hostile takeover of its US rival Engelhard in the hope of becoming a world leader on the market of chemical catalysts.


BASF is prepping for the biggest acquisition in its history

BASF would prefer its planned takeover of US firm Engelhard to be a friendly rather than a hostile move, BASF Chairman Jürgen Hambrecht said in a newspaper interview published on Thursday.

"We have a clear interest in coming to the negotiating table and shaping the transaction jointly," Hambrecht told the Financial Times Deutschland.

"Either there isn't a deal, or there is a deal that has to be negotiated," he said.

"We would clearly prefer a negotiated deal," Hambrecht added.

The German giant had announced Tuesday that it planned to take over Engelhard for $4.9 billion (4.1 billion euros) in a hostile bid after its friendly overtures were rejected by Engelhard's management. If the proposed takeover goes through, it will be the biggest acquisition in BASF's history.

Prospect of market domination

BASF Jürgen Hambrecht

BASF Chairman Jürgen Hambrecht

Engelhard pioneered the auto catalytic converter and the acquisition would grant BASF access to the world leader in chemical catalysts, whose emissions-reducing qualities have become a mainstay of vehicles worldwide since Engelhard launched them in the 1970s.

Analysts believe the price of $37 per share, which BASF is offering, to be adequate.

"That would be an extremely positive and strategically meaningful deal for BASF, which could expand its highly profitable business field," economist Silke Stegemann told DW-WORLD.

With the purchase of its US rival, BASF could become a world leader on the market of chemical catalysts -- a highly lucrative business with great prospects for the future.

"The market for chemical catalysts has an above average growth potential, especially in view of the planned tightening of emission rules in the USA, Europe and Asia," chemical industry expert Dennis Nacken told DW-WORLD.

No official recommendation yet

Engelhard directors called on investors to wait and "take no action at this time in response to an unsolicited proposal from BASF."

"Consistent with its fiduciary duties, the company's board will meet to review and consider BASF's proposal and will make a recommendation to stockholders in due course," Engelhard said.

BASF, on the other hand, is hoping to reduce its overall production costs.

"It's about growing profitably," Hambrecht said.

"We will set up a new catalysts division where we would pool Engelhard's activities with our own existing ones," he said.

Ambitious plans

At the same time as buying Engelhard, BASF is also eyeing the construction chemicals activities of German firm Degussa.

"It would not be a problem for us to undertake two big acquisitions such as Engelhard and Degussa in a short time space, either in financial, personnel or organisational terms," Hambrecht said.

Hambrecht dismissed the idea of a counter-bid for Engelhard from a rival company.

"I can't imagine that," he said.

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