July 30, 2008 / 11:03 AM / in 12 years

BASF looking at takeover targets: report

FRANKFURT (Reuters) - German chemical group BASF BASF.DE is considering taking over U.S. rival W. R. Grace & Co (GRA.N), the Financial Times Deutschland said on Wednesday, citing middle management and banking sources.

As well as assessing Grace, which has $3.1 billion in annual turnover, BASF will also be looking closely at the strategy, company structure and business development of U.S. group Rockwood ROC.N and Germany’s Cognis COGN.UL with a view to acquisitions, the paper said.

All three potential targets have been given project names, a sign that they are being considered seriously for takeover, the report said.

BASF shares were down 0.2 percent at 41.33 euros at 1020 GMT, in line with DJ Stoxx European chemicals index .SX4P. Grace’s Frankfurt-listed shares (GRA.F) traded 13.9 percent higher.

BASF Chief Executive Juergen Hambrecht said this month that consolidation in the sector will accelerate, driven by cost pressures, lower asset prices and financial investor problems.

Earlier this month, rival Dow Chemical (DOW.N) said it would acquire specialty chemical maker Rohm and Haas Co ROH.N for $15.3 billion to tap higher-margin markets such as paints, coatings and electronic materials.

A BASF spokesman said on Wednesday that the company would not comment on the newspaper report or individual companies. He said, however, that BASF continues to look at potential investments as part of its strategy.

BASF, which enjoys the highest credit rating among European chemicals, has said it could buy any company that fits its terms. It had said it could spend up to 10 billion euros ($16 billion) on acquisitions.

The German group is in the process of selling its styrenics operation with annual sales of around 3.2 billion euros.

BASF has trimmed highly cyclical businesses. It spent about 7 billion euros in 2006 to buy U.S. catalyst maker Engelhard, the construction chemicals business of Degussa and U.S. resin maker Johnson Polymer.

Reporting by Sylvia Westall and Mantik Kusjanto; Editing by Greg Mahlich, Paul Bolding

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