2.4 – Acquisitions and divestitures

Acquisitions

In 2013, BASF acquired the following activities:

  • On January 31, 2013, BASF took over all the shares of Pronova BioPharma ASA, a company headquartered in Lysaker, Norway, which researches, develops and produces highly concentrated omega-3 fatty acids. With the acquisition of Pronova BioPharma ASA, BASF aims to take a leading position in the global market for omega-3 fatty acids. Pronova BioPharma ASA’s business has been merged with BASF’s previous activities within the Nutrition & Health division into a global business unit. BASF is now a supplier of the complete range of omega-3 fatty acids in varying concentrations. In the 2013 business year, Pronova BioPharma ASA contributed €200 million to sales and minus €24 million to net income. The negative earnings contribution was attributable to the proportional use of inventories recognized at market value in the course of the purchase price allocation as well as the pro rata amortization of intangible assets totaling €97 million.

The following table shows an overview of the fair values of the assets and liabilities acquired with the Pronova BioPharma ASA takeover as of January 31, 2013. Goodwill represents the assets which are not separable when conducting the purchase price allocation. It primarily relates to the employee know-how and synergies from the integration of the acquired businesses.

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Purchase price allocation for Pronova BioPharma ASA acquisition as of January 31, 2013 (million €)

 

Fair value at time of acquisition

Property, plant and equipment

288

Other intangible assets

271

Financial assets and other noncurrent assets

14

Noncurrent assets

573

 

 

Inventories

136

Accounts receivable, trade

10

Cash and cash equivalents

55

Other current assets

19

Current assets

220

Assets

793

 

 

Provisions for pensions and similar obligations

3

Other long-term provisions

5

Deferred tax liabilities

115

Other noncurrent liabilities

31

Noncurrent liabilities

154

 

 

Financial indebtedness

171

Provisions

5

Other current liabilities

78

Current liabilities

254

Liabilities

408

 

 

Net assets

385

Goodwill

141

 

 

Total purchase price

526

The following additional acquisitions were made in 2013:

  • Effective March 11, 2013, BASF completed its acquisition of parts of Ciech Group’s TDI business, as announced in the third quarter of 2012. The acquisition largely comprised intellectual property rights and access to customers. TDI is used primarily in furniture and automotive industry applications. The acquired business has been integrated into the Monomers division.
  • BASF acquired an enzyme technology for detergents and cleaners from Henkel AG & Co. KGaA, Düsseldorf, Germany, on April 17, 2013. This comprises production hosts, various detergent enzymes, and the corresponding intellectual property. The activities were integrated into the Care Chemicals division.
  • BASF concluded the acquisition of assets from Statoil ASA, headquartered in Stavanger, Norway, effective July 31, 2013. The transaction included the acquisition of shares in the Brage (32.7%), Vega (30%) and Gjøa (15%) fields, which were integrated into the Oil & Gas segment, thus increasing the company’s daily production in Norway from around 3,000 BOE to nearly 40,000 BOE. In return, Statoil ASA received a 15-percent share in the Edvard Grieg development project as well as financial compensation of $1.35 billion, which translates to €1.02 billion. BASF will pay up to a maximum of an additional $100 million contingent on the successful development of the Vega field. The transaction was concluded with retroactive commercial effect as of January 1, 2013. For this reason, earnings from shares in the production of the Brage, Vega and Gjøa fields as well as investments made in these fields since the beginning of 2013 have led to purchase price adjustments. Furthermore, the probable obligation arising from the successful development of the Vega field was calculated in the purchase price adjustments. The fair value of the share of the disposal of the Edvard Grieg development project at €259 million was included in the calculation of the total purchase price.
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Total purchase price of Statoil ASA transaction (million €)

 

July 31, 2013

Compensation payment

1,017

15% share on fair value of Edvard Grieg

259

Purchase price adjustments

(423)

Total purchase price

853

At the closing date of the transaction, a payment was made in the amount of €588 million in addition to the disposal of the share in the Edvard Grieg development project.

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Net payment of Statoil ASA transaction (million €)

 

July 31, 2013

Total purchase price

853

15% share on fair value of Edvard Grieg

(259)

Purchase price to be paid in future

(6)

Net payment

588

The following table shows an overview of the preliminary fair values of the assets and liabilities acquired from Statoil ASA as of July 31, 2013.

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Purchase price allocation for Statoil ASA transaction (million €)

 

Fair value at time of acquisition

Property, plant and equipment

1,204

Other intangible assets

32

Financial assets and other noncurrent assets

197

Noncurrent assets

1,433

 

 

Inventories

Accounts receivable, trade

Cash and cash equivalents

Other current assets

3

Current assets

3

Assets

1,436

 

 

Provisions for pensions and similar obligations

Other long-term provisions

271

Deferred tax liabilities

705

Other noncurrent liabilities

Noncurrent liabilities

976

 

 

Financial indebtedness

Provisions

Other liabilities

250

Current liabilities

250

Liabilities

1,226

 

 

Net assets

210

Goodwill

643

 

 

Total purchase price

853

The transfer of assets from Statoil ASA increased sales in the 2013 business year by €368 million and net income by €24 million. If the acquired assets had been included as of January 1, 2013, pro forma sales would have amounted to €931 million and income €98 million. Taking into account the fair value of €259 million of the transferred portion of the Edvard Grieg development project, income was realized in the amount of €164 million as a special item.

  • Effective October 31, 2013, BASF completed the acquisition of all shares in the Verenium Corporation, based in San Diego, California. As part of the official takeover bid, initially 71% of the shares were bindingly tendered to BASF. All other eligible Verenium shares were converted into a cash claim in the amount of the public bid of $4.00 per share, thus completing the acquisition. Verenium Corporation develops and markets high-quality enzymes which, as catalysts, enable and accelerate biological and chemical processes. At the time of acquisition, the acquired activities were allocated to the Performance Products segment as well as to Other.

The purchase prices for the businesses acquired in 2013 totaled €1,490 million, including noncash purchase price components. Payments for acquisitions amounted to €1,225 million. The purchase price allocations were carried out in accordance with IFRS 3 and are based on estimates. With the exception of the acquisition of Pronova BioPharma ASA, the purchase price allocations should be regarded as preliminary and can be adjusted within one year after the acquisition.

BASF acquired the following businesses in 2012:

  • On February 13, 2012, BASF acquired the Ovonic Battery Company, headquartered in Rochester Hills, Michigan. Ovonic holds numerous patents and patent applications worldwide in the area of nickel-metal hydride (NiMH) battery technology. The company was incorporated into the newly established Battery Materials business unit, a part of the Catalysts division.
  • BASF acquired the polyethylene terephthalate (PET) foams business from B.C. Foam S.p.A., headquartered in Volpiano, Italy, effective February 29, 2012. The acquisition comprised production facilities and industrial property rights. The acquired business became part of the Performance Materials division.
  • On April 25, 2012, BASF acquired the energy storage activities of Novolyte Technologies LP, headquartered in Cleveland, Ohio, which focus on developing, producing and marketing performance electrolyte formulations for lithium-ion batteries. These activities will continue operations as part of BASF’s Battery Materials unit. BASF also acquired the performance materials business from Novolyte Holdings LP, which was integrated into the Intermediates division. As part of the acquisition, BASF is continuing the joint venture in Nantong, China, operated by Novolyte and Foosung Co., Ltd., a Korean producer of lithium hexafluorophosphate (LiPF6).
  • BASF concluded the acquisition of the Brazilian Mazzaferro Group’s polyamide polymer business on May 2, 2012. BASF integrated the acquired activities into its existing engineering plastics and polyamide polymer business within the Monomers division.
  • On May 8, 2012, BASF acquired Equateq Ltd., a producer of highly concentrated omega-3 fatty acids based in Callanish, Scotland. With this acquisition, BASF expanded the Nutrition & Health division’s portfolio of omega-3 products for the pharmaceutical and dietary supplement industries.
  • BASF purchased ITWC Inc.’s business, headquartered in Malcom, Iowa, on July 1, 2012. The transaction complemented BASF’s offering of polyurethane products, systems and specialties in North America. The business was integrated into the Performance Materials division.
  • Effective November 21, 2012, BASF acquired the Becker Underwood Group, which has its headquarters in Ames, Iowa. Becker Underwood is one of the leading global providers of technologies for biological seed treatment and seed treatment colors and polymers, as well as products in the areas of biological crop protection, turf and horticulture, animal nutrition and landscape design. Most of the Becker Underwood businesses joined the newly established Functional Crop Care global business unit as part of BASF’s Crop Protection division. Becker Underwood’s animal nutrition business was integrated into BASF’s Nutrition & Health division.

The following overview shows the effects of the acquisitions conducted in 2013 and 2012 on the Consolidated Financial Statements as of the acquisition date. If acquisitions resulted in the transfer of assets or the assumption of additional liabilities, these are shown as a net impact.

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Effects of acquisitions in the year of acquisition

 

2013

 

2012

 

Million €

%

 

Million €

%

Goodwill

779

11.3

 

586

9.2

Other intangible assets

310

5.8

 

487

8.3

Property, plant and equipment

1,386

7.6

 

106

0.6

Financial assets

 

70

2.4

Other noncurrent assets

236

12.6

 

10

0.2

Noncurrent assets

2,711

7.3

 

1,259

3.6

Current assets

276

1.0

 

167

0.6

Thereof cash and cash equivalents

69

3.8

 

12

0.7

Assets

2,987

4.6

 

1,426

2.3

 

 

 

 

 

 

Equity

164

0.6

 

4

.

Noncurrent liabilities

1,094

5.0

 

211

1

Thereof financial indebtedness

19

0.2

 

Current liabilities

504

3.4

 

156

0.9

Thereof financial indebtedness

171

5.3

 

86

2.1

Total equity and liabilities

1,762

2.7

 

371

0.6

Payments for acquisitions

1,225

 

 

1,055

 

Assets and liabilities of disposal groups

  • On November 14, 2012, BASF and Gazprom agreed to swap assets of equal value. The final contract was signed on December 23, 2013. It is anticipated that the transaction will be closed in mid-2014 with retroactive financial effect as of April 1, 2013. The European Commission agreed to the transaction at the beginning of December 2013. Under the agreement, BASF will receive 25% plus one share in the blocks IV and V in the Achimov formation of the Urengoy natural gas and condensate field in Western Siberia. According to the development plan, blocks IV and V have total hydrocarbon resources of 274 billion cubic meters of natural gas and 74 million metric tons of condensate. A total annual plateau production of at least 8 billion cubic meters of natural gas is expected from the two blocks. Production startup is planned for 2016. In return, BASF will completely transfer its share in the currently jointly operated natural gas trading and storage business to its partner Gazprom. This includes the 50% shares in the natural gas trading companies WINGAS GmbH and Wintershall Erdgas Handelshaus GmbH & Co. KG, including their subsidiaries, and shares in the natural gas storage facilities in Rehden and Jemgum, Germany, and in Haidach, Austria. Gazprom will also receive a 50% share in Wintershall Noordzee B.V., which is active in the exploration and production of oil and gas in the southern North Sea (the Netherlands, the United Kingdom and Denmark). The assets and liabilities of these activities were reclassified into a disposal group at year-end 2012. Until completion of the transaction, sales and income of the BASF’s natural gas trading business as well as that of Wintershall Noordzee B.V. will continue to be reported in the Oil & Gas segment.

The values of the disposal group are shown in the following table:

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Natural gas trading disposal group (million €)

 

Dec. 31, 2013

Dec. 31, 2012

Intangible assets

96

92

Property, plant and equipment

1,102

912

Investments accounted for using the equity-method

81

81

Other financial assets

13

1

Inventories

569

689

Accounts receivable, trade

857

1,321

Positive fair values of derivatives

20

39

Other receivables and miscellaneous assets

78

121

Cash and cash equivalents

12

8

Assets of the disposal group

2,828

3,264

Provisions for pensions and similar obligations

18

21

Other provisions

462

503

Accounts payable, trade

648

1,278

Negative fair values of derivatives

46

45

Other liabilities

116

146

Liabilities of the disposal group

1,290

1,993

Net assets

1,538

1,271

Divestitures

In 2013, the following activities were either divested by BASF or their inclusion in the financial statements was altered due to loss of control:

  • Effective April 2, 2013, BASF concluded the sale of its sprayed concrete technology business for tunneling and mining to Atlas Copco, announced in the fourth quarter of 2012. The transaction comprises the production site in Winterthur, Switzerland, and the sales and service activities in Hermsdorf, Germany. The business had been part of the Construction Chemicals division.
  • On July 1, 2013, BASF sold its activities in the CONICA Sports Surfaces business, including the site in Schaffhausen, Switzerland, to the Serafin Group, headquartered in Munich, Germany. The sale included the development, production and marketing of flooring systems for running tracks, gymnasiums, tennis courts and playgrounds as well as artificial turf solutions. The activities had been part of the Construction Chemicals division.
  • On September 30, 2013 BASF concluded the sale of Industrial Water Management France S.A.S., Lyon, France, to Degrémont, a subsidiary of SUEZ ENVIRONNEMENT. The business had been part of the Performance Chemicals division.
  • On December 31, 2013, BASF concluded the sale of Wall Systems GmbH & Co. KG, headquartered in Marktredwitz, Germany, to ROCKWOOL, as announced on July 18, 2013. The company’s main business is in systems for internal and external building insulation as well as for the renovation and restoration of historical structures. The activities had been part of the Construction Chemicals division.
  • A supplementary agreement to the articles of association for GASCADE Gastransport GmbH expired on December 31, 2013. With the expiration of the agreement and the resulting change in the corporate governance structure, BASF lost control over GASCADE Gastransport GmbH and has only significant influence over the shareholding. According to IFRS 10, this results in a reclassification from fully consolidated company to an associated company accounted for using the equity method in the BASF Group financial statements as of the effective date. BASF continues to hold a 50.02% share in GASCADE Gastransport GmbH.

The balance sheet values of GASCADE Gastransport GmbH (100%) at the time of the reclassification from full consolidation to the equity method are shown in the following table:

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GASCADE Gastransport GmbH (million €)

 

Dec. 31, 2013

Intangible assets

16

Property, plant and equipment

882

Inventories

26

Accounts receivable, trade

5

Positive fair values of derivatives

Other receivables and miscellaneous assets

109

Cash and cash equivalents

Assets

1,038

Provisions for pensions and similar obligations

10

Other provisions

196

Accounts payable, trade

52

Negative fair values of derivatives

Other liabilities

376

Liabilities

634

Net assets

404

Minority interests

202

Proportion of net assets

202

The equity-accounted carrying amount of GASCADE Gastransport GmbH, measured at fair value, amounted to €631 million at the time of the addition. Income of €429 million from the reclassification corresponds with the balance of the investment’s fair value and the outgoing net assets as per IFRS 10.

The following overview shows the individual components of BASF’s profit realization from the reclassification of GASCADE Gastransport GmbH:

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Profit realization from reclassification of GASCADE Gastransport GmbH (million €)

 

Dec. 31, 2013

Fair value of the stake in GASCADE Gastransport GmbH

631

Disposed proportion of net assets

202

Disposal gains

429

In 2012, BASF divested the following activities:

  • As of January 31, 2012, BASF sold its 50% share in the jointly controlled entity PEC-Rhin S.A., Ottmarsheim, France, to its joint venture partner GPN, Courbevoie, France. PEC-Rhin owned and operated production facilities for CAN/AN fertilizers (calcium ammonium nitrate and ammonium nitrate), as well as production facilities for the intermediates ammonia and nitric acid.
  • The disposal of BASF’s fertilizer activities in Antwerp, Belgium, to EuroChem, Moscow, Russia, which had been agreed upon on September 27, 2011, was completed on March 31, 2012, after approval was granted by anti-trust authorities. The sale comprised production facilities for CAN/AN fertilizers (calcium ammonium nitrate and ammonium nitrate), NPK fertilizers (nitrogen, phosphate, potassium), nitrophosphoric acid and three related nitric acid plants.
  • On August 30, 2012, BASF concluded the sale of its offset printing inks business (IMEX), announced on March 15, 2012, to Quantum Kapital AG, headquartered in St. Gallen, Switzerland. The divestiture covered all offset printing inks activities as well as the transfer of all employees at the site in Maastricht, the Netherlands, assigned to the business. The business had been part of the Dispersions & Pigments division.
  • As of November 30, 2012, BASF completed the divestiture of the decorative paints business of Relius Coatings GmbH & Co. KG, Oldenburg, Germany, and of its share in Relius France S.A.S., Ostwald, France. The business had been part of the Coatings division.
  • As of December 19, 2012, BASF sold its Capcure® brand curative business to Gabriel Performance Products LLC, based in Ashtabula, Ohio. The business had been part of the Dispersions & Pigments division.

The following overview shows the effect of the divestitures in 2013 and 2012 on the consolidated financial statements. The line item sales reflects the year-on-year decline resulting from divestitures. The impact on equity relates mainly to gains and losses from divestitures.

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Effects of divestitures in the year of divestiture

 

2013

 

2012

 

Million €

%

 

Million €

%

Sales

(208)

(0.3)

 

(810)

(1.1)

 

 

 

 

 

 

Noncurrent assets

(345)

(0.9)

 

84

0.2

Thereof property, plant and equipment

(895)

(4.9)

 

(16)

(0.1)

Current assets

297

1.1

 

(263)

(1.0)

Thereof cash and cash equivalents

(3)

(0.2)

 

(7)

(0.4)

Assets

(48)

(0.1)

 

(179)

(0.3)

 

 

 

 

 

 

Equity

233

0.8

 

400

1.6

Noncurrent liabilities

(200)

(0.9)

 

154

0.8

Thereof financial indebtedness

 

(1)

.

Current liabilities

(14)

(0.1)

 

(2)

.

Thereof financial indebtedness

 

Total equity and liabilities

19

.

 

552

0.9

Proceeds from divestitures

67

 

 

731

 

Agreed-upon future transactions

  • On December 12, 2013, BASF signed an agreement with the Hungarian MOL Group for the sale of selected oil and gas investments in the North Sea. The transaction comprises 14 licenses, including non-operated equity stakes in the Broom field (29%) as well as the Catcher (20%), Cladhan (33.5%) and Scolty/Crathes (50%) developments. The transaction will be financially retroactive to January 1, 2013. Subject to approval by the relevant authorities and partners, it is expected to be closed in the first quarter of 2014.