The German chemical giant BASF has agreed a multi-billion euro deal for its Swiss rival Ciba. It will create the world’s biggest maker of additives and dyes used in paper and plastics. The deal which includes taking over debt and pension obligations caused shares in both companies to rise.

According to BASF’s management, a far reaching re-vamp is on the cards to ensure the long term profitability of of both companies. Together BASF and Ciba have a combined annual turnover amounting to more than 62 billion euros. Their market share far outstrips their nearest rivals.

Ciba which has slumped about two thirds under the eight year tenure of CEO Armin Meyer, has suffered falling margins as it struggles to pass on higher oil-derived raw material costs.

BASF and its Wintershall unit, which explores and produces oil and gas can ensure a steady supply of raw material to Ciba.

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