BASF is having its day in the sun and the fashion for narrow focus, exhibited by the unfortunate Ciba that has succumbed to BASF's offer, is revealed as a bull market mistake. BASF's deal comes after that of Dow Chemical, the other big integrated chemical company, which pounced on Rohm and Haas in July, offering $15 billion to take over the specialty chemicals business.

Ciba is a venerable name. It dates back to the 18th century company of JR Geigy, a maker of aniline dyes that merged with Ciba, a 19th century chemical business, in 1971. Ciba-Geigy became a leading Swiss player in pharmaceuticals and agro-chemicals, only to succumb to 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 struggled of late and in August it revealed a large loss, in part because of a SwFr500 million writedown in its water treatment and paper chemicals business. The price paid by BASF looks large for a struggling target and the buyer hinted at significant restructuring.

BASF has decided that the best time to spend its cash hoard is when the world is preoccupied by financial gyrations and when high commodity prices are hammering specialist manufacturers, such as Ciba. BASF was long ridiculed for its policy of upstream-downstream integration while others split, demerged and specialised.

Over the past three years, it has paid off, notably with Wintershall, the gas and oil utility that BASF refused to sell and which delivered the cash hoard. Ciba is not the cheapest deal, but BASF is seizing the day and it would be hard to fault the long-term strategy.

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