A Case Analysis of Ciba Specialty Chemical

1314 words 6 pages
Ciba Specialty Chemical’s
Case Analysis

1.) What caused Allied Colloids to become a takeover target?
On March 12th 1998 Ciba Specialty Chemicals (SC) announced its acquisition of Allied Colloids, a company known as a global leader in water treatment. Allied Colloids acquisition aligned with Ciba’s goals in the form of establishing a new pillar for profitable and sustainable growth in the area of water treatment additives. Being the ambitious company that Ciba was, they realized that Allied Colloids could be the platform they had been looking for. This would allow them to enter the water treatment market due to Allied Colloids established global market position and strong technological developments. Allied Colloids was more than just a
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Due to this business transaction the company’s financial statement shows a decline in sales from 1999 to 2000 of almost one billion. This can be deceiving since Ciba’s net income rose slightly over 28% from 325 million to 452 million. When looking at Ciba’s financial statements, we can see that the company took a pretty big hit in 1998. Since then, the company has made a strong and steady climb in the right direction. In the case of Owners Equity this is no different. Looking at the chart below that illustrates O/E along with sales and net income, we can see that for the most part, the company has looked very strong since 1998 in sales, net income, and equity. Ciba | Sales | NI | Equity | 1997 | 7,822 | 293 | 4,336 | 1998 | 8,423 | -739 | 3,293 | 1999 | 8,972 | 325 | 3,685 | 2000 | 7,902 | 452 | 3,754 | 2001 | 7,367 | 382 | 3,908 | 2002 | 7,085 | 406 | 4,354 | 2003 | 6,646 | 344 | 4,245 |
Taken from BASF.com Ciba financial statements 1997-2003 Overall the acquisition of Allied Colloids by Ciba Specialty Chemicals had a positive effect on the company. For the years following the merger sales have increased and thanks to a company restructuring program expenses were cut by 150 million in 1999. The result has been an increase in net income as well as owners’ equity.
4).Who won? Who lost? Be specific and provide detailed analysis.

Stating that a specific party won would indicate that the opposite party lost. When looking at this