Under the terms of the deal, made up of cash and assumed debt of SFr75 million, Huntsman will take over about 4,200 Ciba employees.
Ciba's textile effects business, which produces dyes and other chemicals for the textile industry, has increasingly been struggling in the face of competition from cheaper Asian producers.
Rumours about the future of the business had circulated since August last year when Ciba said it was evaluating all options, including a sale.
In a statement on Monday, Ciba said the board of directors had taken the decision to sell the business after several months of intense evaluation during which several bids were considered.
"The textile business needs a different operational structure from that of our other three segments, as it has a broader, more regional customer base," commented Ciba chairman and CEO Armin Meyer.
He added that the sale of the unit would allow Ciba to focus on its core businesses of plastic additives, coating effects, and water and paper treatment.
One Zurich-based dealer told Reuters he was relieved Ciba had finally found a solution for the unit but added that he had expected a price of about SFr500 million.
"It's been sold and that's the main thing... There will be some relief that this has finally gone through... but I do not expect too much upside potential," commented a second trader.
Meyer told journalists in a conference call that the company did not plan to make any further divestments in the next one to two years, nor did it plan any major acquisitions. He declined to give a 2006 profit forecast after the sale of the unit.
"We prefer to give guidance on the outlook for the company... with the first-quarter figures because we need to go through the impact of this," he said.
Ciba said on Monday that it was taking an after-tax charge of about SFr250 million for the difference between the book value and the sale price, and an extra SFr100-200 million in additional costs after tax relating to the deal.
This includes up to SFr40 million to Huntsman for the costs of adapting the business after the deal.
