German chemical giant, BASF, is close to buying out Switzerland's Ciba, offering to purchase all outstanding shares of the Basel-based speciality chemicals company.

In a statement on Monday, Ciba's board of directors recommended that shareholders accept the offer of SFr50 per share, which equates to a premium of 32 per cent above Friday's closing share price, or a total of SFr6.1 billion ($5.48 billion).

A transaction agreement was signed on Sunday, the statement said.

"Against the backdrop of increasingly challenging conditions within our industry, this is a transaction that combines a fair price with an industrially compelling solution for Ciba," Armin Meyer, Ciba chairman said.

In addition to the agreed offer price, it includes several assurances made by BASF referring to strategically important production sites of Ciba in Switzerland, the research and development site in Basel and the establishment of an operating division of BASF with global responsibilities in Basel.

Ciba has agreed to convene an extraordinary general meeting at which Ciba shareholders will vote on the removal of restrictions to exercise voting rights.

The members recommended by BASF for election to the board will also be presented at the meeting.

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