Monday, July 6, 2009

BASF to cut 3,700 jobs as part of Ciba takover

* To close or sell up to 23 of 55 Ciba sites

* Aims for 400 mln eur in annual synergies

* Sees 500 mln eur in total cash expenses from integration

* Shares up 0.1 percent

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FRANKFURT, July 6 (Reuters) - BASF (BASF.DE: Quote, Profile, Research, Stock Buzz) plans to cut 3,700 jobs as part of the integration of Swiss rival Ciba and may sell or close as many as 23 of Ciba's 55 sites, it said on Monday.

That is the equivalent of around 28 percent of Ciba's 13,000-strong headcount, but some cuts will affect BASF staff, a spokeswoman said.

In its first detailed statement on the repercussions of the takeover, BASF said it aimed to generate synergies of at least 400 million euros ($559.1 million) per year from 2012 and that by the end of next year savings should amount to approximately 300 million euros.

"The combined businesses can be successful in the long term only if we optimise them and exploit the full potential for synergies," Chief Executive Juergen Hambrecht said.

The integration will cost 550 million euros in cash, about 150 million euros of which will be incurred in 2009, the world's largest chemical maker added.

BASF said it would disclose details of further non-cash integration costs along with second-quarter results on July 30.

The company, which agreed to buy Ciba for 3.4 billion Swiss francs ($3.13 billion) a few months before global chemical demand collapsed last year, aims to carry out most of the job cut by 2013 and decide on which sites to shutter or sell by the end of the first quarter of 2010.

BASF has started talks with employee representatives on the cutbacks, it added.

Its shares were little changed after the statement and traded up 0.1 percent at 27.7 euros.

(Reporting by Ludwig Burger and Frank Siebelt)

Chinese visit brings Italian deals worth $2 bln

* Italy, China sign 38 deals worth $2 bln

* Fiat JV to produce cars, engines in China

* Mediobanca, China development bank sign MOU

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ROME, July 6 (Reuters) - Chinese President Hu Jintao's visit to Italy generated over $2 billion worth of deals between the two countries on Monday, including a Fiat SpA (FIA.MI: Quote, Profile, Research, Stock Buzz) joint venture to produce cars and engines in China.

Italian Prime Minister Silvio Berlusconi said Italy aimed to become the third-largest foreign investor in China within three years as the two countries signed 38 business agreements.

Among the biggest of those is carmaker Fiat's 50-50 venture with China's Guangzhou Automobile Industry Group to produce cars and engines in China from the second half of 2011, with a total investment of 400 million euros ($560 million). [ID:nMAT009726]

Fiat, which has just taken a 20 percent stake in U.S. auto maker Chrysler, said the plant would produce 140,000 cars a year and around 220,000 motors after a first phase of development.

Other agreements include a Finmeccanica (SIFI.MI: Quote, Profile, Research, Stock Buzz) memorandum of understanding (MOU) with Chinese company Chongqing on sales in the Chinese market of electronics and components in a deal worth $42 million and an MOU between Italian bank Mediobanca (MDBI.MI: Quote, Profile, Research, Stock Buzz) and the China development bank to support cross-border investments.

Fiat also signed an additional seven deals worth $225 million with Chinese companies.

Fiat has long sought a strong partner in China, where car sales are booming in contrast to slack demand in Europe and the United States. China's car sales soared 47 percent year-on-year in May to 829,100 units. [ID:nRON004699]

Fiat and Chrysler combined have production of about 4.2 million cars a year and together rank fifth equal to Korea's Hyundai Motor Co (005380.KS: Quote, Profile, Research, Stock Buzz) among world car makers.

Fiat said the new plant would be built in Changsha, capital of Hunan province. The project is eligible for support from the Chinese government.

Facebook revenue to be "billions" in 5 years: board member

Facebook will likely be posting billions of dollars in revenue in five years, up from about $500 million this year, according to Silicon Valley entrepreneur Mark Andreessen who sits on Facebook's board.

Andreessen told Reuters that the world's most popular online social network could pile up $1 billion in revenue this year if it pushed harder on selling advertising.

But he added that it was more important at this stage for social sites like Facebook and Twitter to retain and grow their user base and capture market share, rather than worry too much about making lots of money right away.

"This calendar year they'll do over $500 million," Andreessen said in an interview, noting that Facebook has more than 225 million users, so revenue per user is still small.

"If they pushed the throttle forward on monetization they would be doing more than a billion this year," said Andreessen, who made the cover of Time Magazine as founder of the world's first Web browser company, Netscape.

Privately held Facebook -- which counts venture capitalist Peter Thiel, Accel Partners, Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) and Russian Internet investment firm Digital Sky Technologies among its investors -- has never disclosed its revenue except to say it expects 70 percent growth this year.

"There's every reason to expect in my view that the thing can be doing billions in revenue five years from now," Andreessen said.

Andreessen, who is starting his own venture capital fund with Netscape executive Ben Horowitz, regrets not investing in Facebook. "I probably could have if I had tried hard but I didn't," he said, recalling that he has known the founders of Facebook from the beginning.

Andreessen has invested in Twitter, the fast-growing micro-blogging site that lets users share 140-character messages known as tweets.

Twitter famously makes no money, and Horowitz and Andreessen think that that is OK for now because the site needs to focus on increasing its number of users and improve the features it offers so that no rival can swoop in.

"They have to take the market," said Horowitz. "There is no investor in Twitter who will tell you: 'Boy, those guys are screwing up, there's no revenue yet.'"

Horowitz and Andreessen point to the once-leading social network MySpace, which has fallen behind since it was acquired by Rupert Murdoch's News Corp (NWSA.O: Quote, Profile, Research, Stock Buzz).

MySpace focused too much on selling advertisements -- to contribute to News Corp's bottom line -- and not enough on developing the platform, leaving room for Facebook to come in and take market share, they said.

"If the revenue degraded the user experience then that was a very dangerous thing to do," Horowitz said.

Andreessen said it will be difficult, but not impossible, for MySpace to rebound now that Facebook has such a big following. Both he and Horowitz say they do not expect Twitter to make the same kinds of mistakes that MySpace did.

Twitter was a high profile Web start-up even before it shot into the headlines during the Iran election crisis, when the U.S. State Department called on it to reschedule planned maintenance because it considered Twitter a vital communications channel for protesters.

As for Facebook, Chief Executive Mark Zuckerberg told Reuters in May that an initial public offering was not in the cards for at least a few years. Instead, the company is allowing some shareholders to sell their shares to Digital Sky.

"Generally speaking, people who are selling their stock in Facebook now are making a mistake," Andreessen said.