Material Investments and Portfolio Measures

By investing in our plants, we create the conditions for our desired growth while constantly improving the efficiency of our production processes. For the period from 2019 to 2023, we have planned capital expenditures (capex)¹ totaling €21.3 billion worldwide.

With a world market share of more than 40%, China is today the largest chemical market and drives the growth of global chemical production. We expect China’s share to increase to around 50% by 2030. To continue to participate in this growth in Asia in the future, we are investigating the possibility of building an integrated Verbund site in Zhanjiang in the southern Chinese province of Guangdong and expanding the site we operate together with our partner Sinopec in Nanjing, China.

We will also refine our portfolio through acquisitions that promise above-average profitable growth as part of the BASF Verbund and help to reach a relevant market position. We also take into account whether they are innovation-driven or offer a technological differentiation, and make new, sustainable business models possible.

Investments and acquisitions alike are prepared by interdisciplinary teams and assessed using various criteria. In this way, we ensure that economic, environmental and social concerns are included in strategic decision-making.

Investments

We invested €3,615 million³ in property, plant and equipment in 2018 (previous year: €4,020 million). Capex⁴ accounted for €3,498 million of this amount (previous year: €3,735 million). Our investments in 2018 focused on the Chemicals, Functional Materials & Solutions and Performance Products segments.

In Europe, we will strengthen the Verbund by replacing our acetylene plant in Ludwigshafen, Germany, which plays a central role for many products and value chains, with a modern, highly efficient plant by the end of 2019. We are also constructing another production plant for special zeolites in Ludwigshafen, Germany. Special zeolites are used to produce state-of-the-art exhaust catalysts for commercial vehicles and passenger cars with diesel engines. Production startup is scheduled for 2019. In the first quarter of 2018, we started construction of another production plant for vitamin A, which is scheduled for startup in 2020.

In North America, we constructed and started operation of an ammonia production plant in Freeport, Texas, together with Yara International ASA, headquartered in Oslo, Norway. We started construction of a new MDI synthesis unit in Geismar, Louisiana. Startup is scheduled for 2020.

In Asia, we started production at the new aroma ingredients complex in 2018, which was built together with our partner PETRONAS Chemicals Group Berhad, Kuala Lumpur, Malaysia, and at the Ultraform^® plant in Gimcheon, South Korea, build together with our partner Kolon Plastics Inc., headquartered in Gimcheon, South Korea. We are constructing a plant for plastic additives in Shanghai, China, with startup planned for 2019. These investments strengthen our presence in Asia.

Additions to property, plant and equipment² by segment in 2018

Additions to property, plant and equipment² by region in 2018

Acquisitions

We added €1,425 million worth of property, plant and equipment through acquisitions in 2018. Additions to intangible assets including goodwill amounted to €5,540 million.

On March 7, 2018, we 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 acquisition of 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, we closed the acquisition of a range of businesses and assets from Bayer to complement our activities in crop protection, biotechnology and digital farming. At the same time, the transaction marked our 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. We also closed the acquisition of Bayer’s global vegetable seeds business, which mainly operates under the trademark Nunhems^®, on August 16, 2018. This strengthens the Agricultural Solutions division. The all-cash purchase price amounted to a total of €7.4 billion and may be subject to purchase price adjustments.

Divestitures

On January 31, 2018, our 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, Germany, and Hamina, Finland, which is designed to strengthen the Dispersions & Pigments division.

Agreed transactions

On September 18, 2017, we 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 granted conditional clearance for BASF to acquire the polyamide business on January 18, 2019. They require divesting parts of the original transaction scope to a third-party buyer, namely manufacturing assets and innovation capabilities of Solvay for engineering plastics in Europe. The divestment process has started. By complementing the engineering plastics portfolio, enhancing the access to key growth markets in Asia and South America as well as strengthening the value chain through backward integration into key raw materials, BASF will still achieve its key strategic objectives. The review procedure in China is ongoing. Closing is expected in the second half of 2019, as soon as all remaining closing conditions have been fulfilled, including the sale of the businesses and assets to be divested to a third party. We plan to integrate the polyamide business into the Performance Materials and Monomers divisions. Before being adjusted to reflect the necessary 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.

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. BASF and Solenis closed the transaction on January 31, 2019.

On September 27, 2018, we signed a definitive agreement with the LetterOne group to merge our respective oil and gas businesses. The merger aims to create the leading independent company in the European oil and gas sector. To effect the merger, LetterOne will contribute all its shares in DEA Deutsche Erdöl AG to Wintershall Holding GmbH against the issuance of new shares of the company to LetterOne. The company will then be renamed Wintershall DEA. BASF will initially hold 67% and LetterOne 33% of Wintershall DEA’s ordinary shares, reflecting the value of the respective exploration and production businesses of Wintershall and DEA. To reflect the value of Wintershall’s gas transportation business, BASF will receive additional preference shares. No later than 36 months after closing but in all cases before an IPO, these preference shares will be converted into ordinary shares of the company Wintershall DEA. This will increase BASF’s share in Wintershall DEA. Closing of the transaction is expected in the first half of 2019, subject to the approvals of merger control and foreign investment authorities as well as mining authorities and the German Federal Network Agency. Until closing, Wintershall and DEA will continue to operate as independent companies.