BASF SE, Ludwigshafen, Germany, has acquired its rival chemical company Cognis in a $3.8 billion (3.1 billion euro) deal.

The agreement with Cognis Holding Luxembourg S.a r.l., controlled by Permira Funds, GS Capital Partners and SV Life Sciences, is for an equity purchase price of 700 million euro. Including net financial debt and pension obligations, the enterprise value of the transaction is 3.1 billion euro, according to BASF. The transaction is subject to the usual closing conditions, including regulatory approval, and is expected to be formally completed by November 2010 at the latest.

“With the acquisition of Cognis, we are strengthening our portfolio with cyclically robust and profitable businesses and further expanding our position as the world’s leading chemical company,” said Dr. Jurgen Hambrecht, chairman of the Board of Executive Directors of BASF SE.

Cognis is a worldwide supplier of innovative solutions and products based on renewable raw materials for the health and nutrition market, as well as the cosmetics, detergents and cleaners industries. Another main focus is on products for a number of other industries, such as mining, lubricants, coatings, as well as agriculture. The company employs about 5500 people, and it operates production sites and service centers in 30 countries. In 2009, Cognis had sales of about euro 2.6 billion and an EBITDA (earnings before interest, taxes, depreciation and amortization) of euro 322 million.

“With the support of our owners Permira Funds and CS Capital Partners, we have become a leading innovative supplier of specialty chemicals,” stated Dr. Antonio Trius, CEO of Cognis. “In particular, our focus on wellness and sustainability and our expertise in renewable raw-material based products have been our main success factors. We are convinced that there are excellent opportunities through combining the strengths of Cognis and BASF.”

In a press release issued by Cognis, Dr. Trius also said: “Cognis has performed very well over the last years, and is well positioned in attractive growth markets. The transaction combines expertise and synergies in technologies, innovations and market know-how. This will allow the leveraging of business opportunities and provide a comprehensive range of products and solutions for customers. We also believe that Cognis’ excellent market position and clear focus on the trends wellness and sustainability, especially our green products, make a perfect strategic fit.”

“With this acquisition, we want to achieve a leading position in personal care ingredients, strengthen our leading position in value added products for home care and establish a strong position in health and nutrition products,” said Dr. John Feldmann, member of the Board of Executive Directors of BASF and responsible for the Performance Products segment. “By purchasing Cognis, we will, in particular, expand our portfolio with products based on renewable raw materials. A broader and more attractive offering of products and services combined with our research and development expertise will allow us to become an even more important partner for joint development projects with our customers. This will contribute to making them even more successful.”

Following the necessary approvals, the business will be integrated into BASF’s Performance Products segment. The segment had sales of euro 9.4 billion in 2009. Performance products help customers to improve their products and processes. They give special characteristics to countless everyday products: for example diapers, paper, vitamins for food supplements, UV filters for sunscreen, plastic additives and products for water treatment, mining applications and for the oil, automotive and coatings industries. “The acquisition of Cognis is an important step in our segment strategy of growth, value and sustainability,” explained Mr. Feldmann.