2.4 – Acquisitions and divestitures

Acquisitions

In 2017, BASF acquired the following activities:

• Effective January 1, 2017, BASF took over the western European Construction Chemicals business from the Henkel group with the trade names Thomsit^® and Ceresit^® for floor and tile-laying systems as well as sealants for professional users. This strengthened BASF’s portfolio in the construction chemicals business of the PCI Group, which belongs to the Construction Chemicals division.
• On February 7, 2017, BASF acquired the private company Rolic AG headquartered in Allschwil, Switzerland. The company develops and sells ready-to-use formulations and functional film products for the display and security industry against forgery as well as barrier materials and films. With the acquisition, BASF broadened its technology know-how and product portfolio of display materials. The largest part of the activities was integrated into the Dispersions & Pigments division and a smaller part into the Coatings division.
• On May 24, 2017, BASF acquired ZedX Inc., Bellefonte, Pennsylvania. The company develops agronomic weather, crop and pest models that can rapidly translate data into insights for more efficient agricultural production. The integration of the business into the Crop Protection division strengthens BASF’s activities in the area of digital agriculture.
• On September 4, 2017, BASF completed the acquisition of GRUPO Thermotek, a leading manufacturer of waterproofing systems in Mexico with headquarters in Monterrey, Mexico. The acquisition strengthens the Construction Chemicals division’s sales channels and its product portfolio, especially in Mexico. The transaction includes trademarks such as Thermotek^® and Chovatek^®.

The purchase prices for businesses acquired in 2017 and the purchase price adjustments for acquisitions from 2016 totaled €154 million including a contingent consideration; as of December 31, 2017, payments made for these amounted to €155 million. The purchase price allocations were carried out in accordance with IFRS 3. The resulting goodwill amounted to €97 million. The purchase price allocations consider all the facts and circumstances prevailing as of the respective dates of acquisition that were known prior to the preparation of these Consolidated Financial Statements. In accordance with IFRS 3, should further facts and circumstances become known within the 12-month measurement period, the purchase price allocation will be adjusted accordingly.

In 2016, BASF acquired the following activities:

• On September 26, 2016, BASF concluded the acquisition of Guangdong Yinfan Chemistry (“Yinfan”) in Jiangmen, China, and integrated the business into the Coatings division. This acquisition enabled BASF to expand its portfolio of automotive refinish coatings in Asia Pacific with the addition of the Yinfan product range and gain access to a state-of-the-art production plant for automotive refinish coatings in China.
• On December 14, 2016, BASF concluded the acquisition of the global surface treatment provider Chemetall from Albemarle Corp., Charlotte, North Carolina. The acquisition complements the Coating division’s portfolio by adding customized technology and system solutions for the treatment of surfaces. The purchase price, after adjustments to the net financial debt and net working capital, amounted to $3.1 billion.

The preliminary purchase price allocation for the acquisition of Chemetall was reviewed at the end of the 12-month measurement period in accordance with IFRS 3 and corrected to reflect more detailed information on tax matters, provisions for pensions and a retroactive purchase price adjustment. This reduced net working capital by €13 million. Taking into account a cash-effective adjustment, the total purchase price rose by €6 million. Overall, the adjustments increased goodwill by €19 million to €1,564 million. The goodwill recognized resulted primarily from sales synergies arising from the expansion of the portfolio, and to a smaller extent from cost synergies.

The following overview shows the effects of the acquisitions conducted in 2017 and 2016 on the Consolidated Financial Statements. If acquisitions resulted in the transfer of assets or the assumption of additional liabilities, these are shown as a net impact.

Divestitures

In 2017, BASF sold the following activities:

• On February 28, 2017, BASF sold its inorganic specialties business to Edgewater Capital Partners LP, Cleveland, Ohio. The transaction comprised the production site in Evans City, Pennsylvania, and the product lines for special alcoholates, boranes and alkali metals manufactured there in the Intermediates division.
• On July 17, 2017, BASF sold its Bleaching Clay and Mineral Adsorbents businesses to EP Minerals LLC, based in Reno, Nevada. The divestiture affected one global business unit in the Catalysts division and comprises a production site as well as a bleaching clay mine in Mississippi and the mineral rights sublease for a mine in Arizona. Sixty-six employees transferred to EP Minerals LLC.
• On September 29, 2017, BASF completed the combination of the global leather chemicals business in the Performance Chemicals division with the Stahl group. The transaction comprised the global leather chemicals business, as well as the leather chemicals production site in L’Hospitalet, Spain. Around 210 jobs were affected worldwide, 110 of which were in Asia. Under the terms of the agreement, BASF received a 16% minority interest in the Stahl group as well as a payment; this resulted in special income. Furthermore, in the medium to long term, BASF will supply Stahl with significant volumes of leather chemicals.
• On September 30, 2017, BASF concluded the sale of its production site for electrolytes in Szhou, China, to Shenzhen Capchem Technology Co. Ltd., based in Shenzhen, China. The site was allocated to the Catalysts division.

In 2016, BASF sold the following activities:

• On June 30, 2016, BASF completed the sale of its global polyolefin catalysts business to W.R. Grace & Co., Columbia, Maryland. The transaction involved technologies, patents, trademarks and the transfer of production plants in Pasadena, Texas, and Tarragona, Spain. Around 170 employees transferred to Grace. These activities had been assigned to the Catalysts division.
• On August 26, 2016, BASF sold its worldwide photoinitiator business in the Dispersions & Pigments division to IGM Resins B.V., Waalwijk, Netherlands. The transaction comprised technology, patents, trademarks, customer relationships, contracts and inventories as well as the photoinitiator production site in Mortara, Italy. The sale affected 120 employees worldwide.
• On December 14, 2016, BASF sold the Coatings division’s industrial coatings business to the AkzoNobel Group. The transaction included technologies, patents and trademarks, customer relationships, inventories as well as the transfer of two production sites in England and in South Africa.

The following overview shows the effects of the divestitures conducted in 2017 and 2016 in 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.

Agreed-upon transactions

On September 18, 2017, BASF signed an agreement with the Solvay group on the acquisition of Solvay’s global polyamide business. Solvay and BASF aim to close the transaction in the third quarter of 2018 after regulatory approvals have been obtained and the consent of a joint venture partner has been received. The acquisition would complement BASF’s engineering plastics portfolio and expand the company’s position as a solutions provider for the transportation, construction and consumer goods industries as well as for other industrial applications. BASF plans to integrate the global polyamide business into the Performance Materials and Monomers divisions. The purchase price on a cash and debt-free basis and excluding other adjustments is €1.6 billion. If the transaction is not concluded, the agreement provides for, subject to certain conditions, a payment of €150 million from BASF to Solvay.

On October 13, 2017, BASF announced that it had signed an agreement on the acquisition of significant parts of Bayer’s seed and non-selective herbicide businesses. The assets to be acquired include Bayer’s global glufosinate-ammonium business, commercialized under the Liberty^®, Basta^® and Finale^® trademarks, as well as its seed businesses for key row crops in selected markets. The transaction also covers Bayer’s trait research and breeding capabilities for these crops. BASF will acquire the manufacturing sites for glufosinate-ammonium production and formulation in Germany, the United States and Canada, seed breeding facilities in the Americas and Europe as well as trait research facilities in the United States and Europe. With the acquisition, which is expected in the first half of 2018 subject to the closing of Bayer’s acquisition of Monsanto and approval by the relevant authorities, BASF will expand its crop protection business, strengthen the herbicide portfolio and enter into its own seed business in key agricultural markets. More than 1,800 employees are to be transferred to BASF with the acquisition, strengthening the Crop Protection division. The purchase price amounts to €5.9 billion, subject to certain adjustments at closing.

Intended transactions

On December 7, 2017, BASF signed a letter of intent with the LetterOne group on the merger of their respective oil and gas businesses in a joint venture, which would operate under the name Wintershall DEA. The definitive transaction agreements are to be negotiated over the coming months; the transaction could close in the second half of 2018, subject to the customary regulatory approvals. There is no assurance that BASF will enter into definitive transaction agreements with LetterOne or that the intended transaction will be consummated. Due to this uncertainty, BASF continues to report Oil & Gas as continuing operations.