BASF bids adieu to magnetic tape business It wants the world to start thinking of it as a chemical company

Multinationals

August 16, 1996|By BLOOMBERG BUSINESS NEWS

LUDWIGSHAFEN, Germany -- BASF AG bowed out of the highly competitive audio and videotape business yesterday without any worries about giving up the product that made it a household name around the world.

In fact, the German multinational seemed a bit relieved to shed the business that overshadowed its global position in chemicals, pharmaceuticals, plastics, oil and gas.

"We have a cassette as an advertisement for a chemical company. There is absolutely no connection there," explained BASF Management Board member Max Dietrich Kley.

BASF decided the best way to escape the trappings of its 64-year presence in the magnetic tape market was to sell the entire magnetics business to Turkey's Raks Electronics Sanayi ve Ticaret AS.

Raks says it has no qualms about stepping into BASF's shadow. By taking on a business three times its size, the Turkish company instantly expands its presence in the worldwide market for audio and video cassettes, computer discs and other magnetic products.

After the sale, which is to take effect Jan. 1, BASF AG hopes the world will stop thinking of it as just a tape company.

"That is wrong," Kley said. "We are a chemical company and we are one of the finest chemical companies in the world."

BASF is one of the original players in the cassette business, dating to 1932, when it teamed with Germany's AEG AG to develop cassettes and cassette players based on a magnetic sound-recording device designed by German engineer Fritz Pfleumer.

It was a BASF tape that recorded the first concert in 1936, when the London Philharmonic Orchestra played in the German company's hometown of Ludwigshafen.

Over the years, BASF introduced the first hard-coated tapes in 1950, the first long-play tapes in 1953 and the first chrome tapes in 1971. The company also expanded into video cassettes, computer discs and their various derivatives, making it a household name practically the world over and bringing in about 1.5 billion marks in sales last year.

From 1990 to 1995, however, BASF absorbed losses totaling 600 million marks ($400 million) from its magnetic tapes unit, known as BASF Magnetics GmbH. Cost-cutting, including the closure of plants in Berlin and Ettenheim, Germany, and in Gien, France, has brought the business back to a break-even level.

Pub Date: 8/16/96

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