BASF’s $8.8b deal for Bayer seed and ag chem assets

BASF's $8.8b deal taps new seed and non-selective ag chem market


Agribusiness
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BASF gains 1800 new commercial, research and production staff, including Australian personnel

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German chemical giant, BASF, is making good its promise to snap up assets being divested by agribusiness rivals involved in global super-mergers.

BASF has just swooped on significant parts of Bayer’s seed and non-selective herbicide businesses for about $8.8 billion, including operations in Australia.

The acquisition marks BASF’s entry into the seed business as well as giving it a much expanded crop chemical production platform and range.

BASF picks up canola hybrids using the herbicide-resistant LibertyLink trait technology, also found in oilseed rape, mainly sold in European markets, cotton varieties in the Americas and Europe, and soybean lines in the Americas.

In North America, where 70 per cent of the newly acquired BASF business is centred, Bayer’s InVigor canola variety carries the LibertyLink trait.

The transaction also includes 10 trait research and seed breeding facilities, the LibertyLink trademark, 81 chemical production sites, and regional research stations.

BASF's Australian agriculture boss, Gavin Jackson.

BASF's Australian agriculture boss, Gavin Jackson.

Bayer has research sites at Horsham in Victoria and Mount Gambier in South Australia, however no exact details about the transfer of its local assets and staff to BASF have yet been released.

Worldwide, more than 1800 commercial, research and development, breeding and production personnel will transfer.

They are primarily based in the US, Germany, Brazil, Canada and Belgium.

Competition regulators have required Bayer offload the assets as part of its planned $112b buyout of US chemical and plant genetics business, Monsanto, so it does not gain monopoly positions in the agribusiness market.

BASF’s Australia and New Zealand agriculture head, Gavin Jackson, said the acquisition was the biggest in the company’s history, reinforcing the diverse chemical player’s commitment to agriculture.

In particular, BASF’s return to the Australian market in the past three years would now see its crop protection range expanded well beyond the 25 new releases planned by 2022.

The broad spectrum glufosinate herbicide range (similar to glyphosate and paraquat  in its non-selective impact on plants) gives BASF a particularly big stake in the non-selective weed spray market.

The non-selective herbicide option has not been an area where we’ve been active, so it will represent one of several big opportunities for our Australian business - Gavin Jackson, BASF

Bayer’s global glufosinate business is worth about $750 million a year.

“The non-selective herbicide option has not been an area where we’ve been active, so it will represent one of several big opportunities for our Australian business,” Mr Jackson said.

BASF will acquire manufacturing sites for glufosinate-ammonium production and formulation in Germany, the US and Canada.

“We look forward to welcoming our new colleagues to BASF,” said BASF’s crop protection division president, Markus Heldt.

“As highly experienced, dedicated and motivated professionals they will enrich our team with their expert knowledge in crop protection, seeds and traits.

“Together, we will shape the long-term success of BASF, serving the needs of farmers around the globe.”

For the 2016 trading year the Bayer assets being bought by BASF had sales worth almost $2b.

The cash purchase deal with BASF is still subject to certain price adjustments at closing and approval by relevant authorities, including in Australia.

The deal is expected to close in early in 2018.

“It will be a strategic complement to BASF’s well-established and successful crop protection business as well as to our own activities in biotechnology,” said BASF’s chairman of executive directors, Dr Kurt Bock.

“The acquisition will further enhance our agricultural solutions offer, a core pillar of BASF’s portfolio.”

Member of the board of executive directors responsible for the agricultural solutions segment, Saori Dubourg, said the c enhanced portfolio would enable BASF to offer farmers a greater choice to satisfy their needs for high quality seed, chemical and biological crop protection.

“Moreover, this transaction will create new opportunities for future growth and strengthen our global innovation potential,” she said.

BASF, already the world’s biggest chemical business,, currently has about 114,000 employees in segments ranging from mainstream chemicals to functional materials, oil and gas and agriculture

Last year its crop protection division generated sales of $8.3b.

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