2.4 – Acquisitions and Divestitures

Acquisitions

In 2018, BASF acquired the following activities:

• On March 7, 2018, BASF closed the agreement to form BASF TODA America LLC (BTA), Iselin, New Jersey, for battery materials. BTA is a cooperative venture between BASF and TODA; BASF holds a majority share in and control over BTA. With the Battle Creek site in Michigan and the site contributed by BASF in Elyria, Ohio, the new company took over production of high energy cathode active materials for e-mobility applications. The transaction strengthens the Catalysts division’s battery materials business.
• On August 1, 2018, BASF closed the acquisition of a range of businesses and assets from Bayer to complement its own activities in crop protection, biotechnology and digital farming. At the same time, the transaction marked BASF’s entry into the seeds, non-selective herbicides and nematicide seed treatments businesses. The assets acquired included Bayer’s global glufosinate-ammonium business, commercialized under the Liberty^®, Basta^® and Finale^® trademarks, as well as its seed businesses for key field crops in selected markets. The transaction also covered Bayer’s trait research and breeding capabilities for these crops. BASF acquired 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. BASF also closed the acquisition of Bayer’s global vegetable seeds business, which mainly operates under the trademark Nunhems^®, on August 16, 2018. The acquired vegetable seed business comprises 24 crops and about 2,600 varieties. It also includes R&D breeding systems with more than 100 breeding programs in over 15 cultures. This strengthens BASF’s Agricultural Solutions division. The purchase price amounted to a total of €7.4 billion and may be subject to further purchase price adjustments.

The following table provides the preliminary fair values of the assets and liabilities acquired from Bayer.

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.

Goodwill of €1,253 million resulted in particular from sales synergies. The businesses acquired from Bayer contributed €586 million to sales and minus €256 million to income from operations in 2018. If Bayer’s businesses and assets had been included in BASF’s Consolidated Financial Statements for the first time as of January 1, 2018, sales revenue would have totaled €2,027 million and income from operations minus €129 million. This pro forma data serves the purpose of comparability; it does not necessarily provide the values that would have resulted had the transaction occurred as of January 1, 2018. Furthermore, they are not a forecast of future developments or results. The majority of total goodwill is tax deductible.

• Wintershall Middle East GmbH acquired a 10% stake in Abu Dhabi National Oil Company’s (ADNOC) Ghasha concession in the United Arab Emirates (UAE) on November 25, 2018. The Hail, Ghasha, Dalma and other ultra-sour gas and condensate fields are located in the Al Dhafra region off the coast of the Golf Emirate. The acquisition in the discontinued oil and gas business marks Wintershall’s entry into natural gas and condensate production in Abu Dhabi.

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 formerly 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 documents 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 Agricultural Solutions 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 strengthened 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 2018 and the purchase price adjustments for acquisitions from 2017 totaled €7,600 million. Payments amounted to €7,431 million in 2018. The purchase price allocations were carried out in accordance with IFRS 3. Goodwill resulted in the amount of €1,261 million.

The following overview shows the effects of acquisitions in 2018 and 2017 on the Consolidated Financial Statements. When acquisitions resulted in the transfer of assets or the assumption of additional liabilities, these are shown as a net impact.

Divestitures

In 2018, BASF sold the following activities:

• Shares in the Aguada Pichana Este concession in Argentina were sold on January 23, 2018. The sale pertained to the discontinued oil and gas business.
• On January 31, 2018, BASF’s production site for styrene butadiene-based paper dispersions in Pischelsdorf, Austria was sold to Synthomer Austria GmbH, a subsidiary of the British specialty chemicals manufacturer Synthomer plc. The styrene acrylic dispersions that were produced in Pischelsdorf were not included in the sale. They were bundled with the businesses in Ludwigshafen, Germany. The sale was made in connection with the concentration of paper dispersions production in Europe at the sites in Ludwigshafen and Hamina, Finland, which is designed to strengthen the Dispersions & Pigments division.

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 absorbents 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. 66 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 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 Suzhou, China, to Shenzhen Capchem Technology Co. Ltd., based in Shenzhen, China. The site was allocated to the Catalysts division.

The following overview shows the effects of the divestitures conducted in 2018 and 2017 on the Consolidated Financial Statements. The sales line item shows the year-on-year decline resulting from divestitures. The impact on equity related mainly to gains and losses from divestitures.

Agreed transactions

• On September 18, 2017, BASF signed an agreement with the Solvay group on the acquisition of Solvay’s global polyamide business, subject to the approval of the relevant antitrust authorities. The E.U. Commission approved the acquisition of the polyamide business, subject to certain conditions, on January 18, 2019. These conditions require the sale of parts of the original transaction volume to a third party. Specifically, this refers to Solvay’s production plants and innovation competencies in the engineering plastics field in Europe. The sale process has already begun. The approval process is pending in China. The transaction is expected to close in the second half of 2019, as soon as all remaining conditions are met. This includes the divestiture of businesses and assets to a third party. BASF plans to integrate the polyamide business into the Performance Materials and Monomers divisions. Before being adjusted to reflect the antitrust-related changes to the scope of the transaction, the purchase price on a cash and debt-free basis and excluding other adjustments would have been €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 May 3, 2018, BASF and Solenis announced that they had signed an agreement on the combination of BASF’s paper and water chemicals business with Solenis. The affected assets and liabilities were reclassified to a disposal group. BASF and Solenis closed the transaction on January 31, 2019.

• On September 27, 2018, BASF and the LetterOne group signed a definitive transaction agreement to merge their oil and gas businesses. The merger is intended to form an independent European exploration and production company with international operations.