September 16, 2008 / 2:39 PM / 11 years ago

UPDATE 1-Large Ciba shareholder rejects BASF bid

(Adds details, background)

ZURICH, Sept 16 (Reuters) - Ciba CIBN.VX shareholder Bestinver rejected as too low BASF’s BASF.DE 3.4 billion Swiss franc ($3.06 billion) offer for the Swiss speciality chemicals group on Tuesday.

“Bestinver...believes that the offer agreed between BASF and the board of directors of Ciba significantly undervalues the company,” Bestinver said in a statement.

“Both according to similar transactions that have taken place in the speciality chemical sector and to the capacity of the company to generate free cash flow,” it went on to say.

Bestinver, which holds a 13.2 percent stake in Ciba, said it had “no intention to tender the shares at the current offered price”.

Basel-based Ciba’s board has said it supports the offer, which is expected to be completed in the first quarter of next year, and will recommend that shareholders accept it.

The offer from BASF, the world’s biggest chemicals maker follows Dow Chemical’s (DOW.N) $15.3 billion bid for rival Rohm and Haas ROH.N in July, signalling that a consolidation of the industry is speeding up amid high raw material and energy costs.

Including Ciba’s net debt and pension provisions, the deal is worth 6.1 billion Swiss francs ($5.48 billion).

Basel-based Ciba, which makes colours for plastics, paper and wood, shocked the market last month by announcing it might sell key businesses after it posted a surprise first-half net loss due to a writedown in its water and paper treatment unit.

Reporting by Katie Reid; editing by Elaine Hardcastle

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