BASF, the German chemicals company, is to take over Ciba, the Swiss company that makes chemical additives for the plastics, paper and coatings industries.

The cash offer of SwFr 50 per share has been accepted by Ciba's board and values the business, including net debt, at SwFr 6.1 billion (£3 billion), according to BASF.

Ciba’s performance has been weak. The company reported a loss in the second quarter, after giving warning in April that it was suffering from the rising cost of raw materials, currency fluctuations and production problems.

Ciba's stock rose 29 per cent as the market opened in Zurich this morning. The cash offer represents a premium of 32 per cent over the price at which the shares closed on Friday.

BASF said the deal would strengthen its portfolio and expand its position in speciality chemicals, particularly the plastics and coatings industries as well as water treatment chemicals. In paper chemicals, the deal would make BASF the leading supplier, the company said.

Jurgen Hambrecht, BASF’s chairman, said the acquisition of Ciba would enhance earnings by the second year after the takeover.

“We recognise the strength of broad areas of Ciba’s portfolio, even if the company’s performance has disappointed analysts and investors, especially in the second quarter of 2008,” he said.

He cautioned that integration of Ciba’s business into BASF would require “necessary further restructuring measures [which] will give the businesses sustainable strength and offer them a long-term perspecitve for profitable growth. The precondition for this is to rigorously improve operational excellence.”

Ciba reported a first-half net loss of SwFr 569 million, including a big asset writedown, and suggested that it might sell parts of the company. Standard & Poor’s, the credit rating agency, lowered its rating on Ciba because of the deterioration in its profitability.

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