The narrow focus favoured by Ciba is being shown to be a bull market mistake. BASF's purchase of its Swiss rival follows this summer's move by Dow Chemical, the other big integrated chemical company, on Rohm and Haas, the specialty chemicals group, which agreed to be taken over for $15 billion in July.

Ciba is a venerable name in the chemicals firmament. The business goes back to the 18th century firm of JR Geigy, a maker of aniline dyes, which, in 1971, merged with Ciba, a 19th century chemical company. Ciba-Geigy became a leading Swiss player in pharmaceuticals and agro-chemicals, only to succumb in the mid-1990s bout of drug company takeovers: it merged with Sandoz to become Novartis and Ciba was spun out as the rump specialty chemicals business.

It has recently struggled, buffeted by raw material price shocks and production problems and in August revealed a large loss, partly due to a half billion Swiss franc writedown in its water treatment and paper chemicals business. The price paid by BASF looks large for a group that is struggling and BASF hinted at significant restructuring but the German company said nothing about cost advantages and financial synergies from combining the two operations.

Still, BASF has decided that the best time to spend its cash hoard is when the world is preoccupied by financial gyrations and high commodity prices are hammering specialist manufacturers, such as Ciba. For years, BASF was ridiculed for sticking to its knitting, maintaining its upstream-downstream integration when others split, demerged and specialised. Over the past three years, the unfashionable stance has paid off, notably with Wintershall, the gas and oil utility that BASF stubbornly refused to sell and which delivered the cash hoard. Ciba may not be the cheapest deal but BASF is seizing the day and it would be hard now to fault the long-term strategy.

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