Ciba Specialty Chemicals And Clariant To Merge

In a move that has generally surprised business analysts, the two companies are merging into an 18-billion/yr Swiss francs ($13-billion/yr) chemical giant, pending shareholder and regulatory approval. In their announcement, the companies called the combination a "merger of equals to capture a leading position in specialty chemicals." Ciba (Basel, Switzerland) shareholders will receive 46% of the shares, and Clariant, headquartered in Muttenz, Switzerland, 56%. There will also be a reduction of 3,000 jobs out of 55,000 worldwide, but no further significant job reductions in Switzerland (there had been earlier job cuts at both companies.) The new company will assume the name Clariant combined with Ciba's distinctive butterfly symbol.

Rolf Schweizer will assume the role of Chairman of the Board of Directors and President of the new company. Rolf Meyer will be named CEO, Vice-Chairman of the Board and head of the Executive Committee. Schweizer, Chairman and President of Clariant, said: "This merger is the unique opportunity to form a Swiss-based global leader in specialty chemicals ... [It] is a major step in the ongoing consolidation of specialty chemicals and will certainly shape future developments in the industry."

Meyer, chairman of Ciba, said that "This makes excellent strategic sense with our complementary portfolio of products and businesses and shared focus on sustained operating performance. The management of both companies with their proven international experience, have a strong track record in delivering results and building motivated, performance orientated teams. These qualities will help a seamless transition and drive a rapid integration."

Ironically, it brings together two companies whose parents, after having divested themselves of their chemical wings, themselves merged: Sandoz, which had spun out Clariant, and Ciba-Geigy, which had spun out Ciba, merged to form Novartis.

The merged group will become the leading specialty chemicals company, with combined annual sales of around CHF 18 billion in more than 120 countries. The Group will be founded on five business groups encompassing: Additives and Water Treatments; Cellulose Ethers; Process Chemicals; Fine Chemicals; and Colors. The growth platforms will be water treatment, fine chemicals for pharmaceuticals and agrichemicals as well as electronic chemicals.

Clariant is a leading global specialty chemicals company with more than 30,000 employees and annual sales of about 10 billion Swiss francs. The company has grown out of the Sandoz Chemicals Division, which was floated on the stock market as a spin-off in the summer of 1995, and the Hoechst specialty chemicals business, integrated in the summer of 1997. Clariant operates worldwide with Group companies in more than 60 countries. Its six divisions are Process & Performance Products, Pigments & Additives, Masterbatches, Surfactants, Fine Chemicals, and Cellulose Ethers & Polymerisates.

Ciba Specialty Chemicals is one of the world's leading developers and producers of specialty chemicals and operates on a global basis with sales in 117 countries and manufacturing facilities in 29 countries. The 1997 pro forma sales (including Water Treatments) would have been 9 billion Swiss francs. Its five divisions—Additives, Colors (from September 1, 1998), Consumer Care, Performance Polymers, and Water Treatments (from April 1, 1998)—all have leading positions in their chosen market segments. In 1997, 302 million Swiss francs were spent on R&D to foster innovation across the group.