The chemicals giant produces a wide range of products for personal care manufacturers including cosmetic polymers, active ingredients, UV filters, pigments and delivery systems.
BASF's structural shake-up will result in the creation of six segments with the new care chemicals division falling under the performance products segment along with acrylics and dispersions and performance chemicals.
Serving the personal care and cosmetics sectors as well as nutrition and pharmaceuticals, the new care chemicals division will combine the activities of the former fine chemicals division and the company's household goods business.
Germany-based BASF said the businesses complement each other so assembling them under one roof will permit greater knowledge and resource sharing.
The move will improve its customer service because buyers will have access to a wider range of relevant products from the same division, added the company.
"We are focusing our business even more closely on our customers," said BASF chairman Jurgen Hambrecht.
"This will enable us to bring our products and system solutions faster to market and will create additional potential for value-adding growth."
The reorganisation of the business, which comes into effect on 1 January 2008, brings similar businesses together in each segment making it easier to assess the performance of the company, added Hambrecht.
The new care chemicals division has annual sales of €3bn and will employ 4,600 people.
It will be led by Gabriel Tanbourgi, who is currently the head of the Global Procurement & Logistics division.
Along with the reorganisation plans, BASF also announced the strengthening of its competence centres at its headquarters in Ludwigshafen The company said the investment will deepen the expertise of employees and encourage knowledge sharing within the company.