2.4 – Acquisitions and Divestitures

Acquisitions

In 2019, BASF acquired the following activity:

• BASF acquired 100% of shares in Isobionics B.V., Geleen, Netherlands, on September 26, 2019. The company develops and produces a wide range of natural flavors and fragrances with a focus on citrus oil components. The acquisition affects the Nutrition & Health division.

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 the 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 strengthened 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 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 seeds business comprised 24 crops and about 2,600 varieties. It also included R&D breeding systems with more than 100 breeding programs in over 15 crops. This strengthened BASF’s Agricultural Solutions division. The purchase price totaled €7.5 billion. The preliminary purchase price allocation for the acquisition of these Bayer businesses was reviewed at the conclusion of the 12-month valuation period in accordance with IFRS 3 and restated due to more detailed information and purchase price adjustments. This adjustment of the purchase price allocation gave rise to the effects presented in the following table.
• Wintershall Middle East GmbH acquired a 10% share 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 Gulf Emirate. The acquisition in the discontinued oil and gas business marked Wintershall’s entry into natural gas and condensate production in Abu Dhabi.

The purchase prices for businesses acquired in 2019 and the purchase price adjustments for acquisitions from 2018 totaled €104 million. Related payments amounted to €239 million in 2019. Purchase price allocations were carried out in accordance with IFRS 3. This resulted in a total decrease in goodwill of €47 million.

The following overview shows the effects of acquisitions in 2019 and 2018 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 2019, BASF sold the following activities:

• On January 31, 2019, following the approval of all relevant authorities, BASF and Solenis concluded the transfer of BASF’s paper and water chemicals business to Solenis. Since February 1, 2019, the combined company has operated under the name Solenis UK International Ltd., London, United Kingdom, and offers bundled sales, service and production capabilities across the globe. BASF holds a 49% share in the combined entity; 51% of the shares are held by funds managed by Clayton, Dubilier & Rice, and by Solenis management. The transaction included production sites and plants of BASF’s paper and water chemicals business in Bradford and Grimsby, England; Suffolk, Virginia; Altamira, Mexico; Ankleshwar, India; and Kwinana, Australia. BASF reports its share of Solenis’ income after taxes using the equity method in income from operations of the BASF Group. The divestiture affected the Performance Chemicals division and the equity-accounted interest assumed in the transaction is reported under Other.

• BASF and LetterOne completed the merger of Wintershall and DEA on April 30, 2019. On September 27, 2018, BASF and LetterOne had signed a transaction agreement to merge their respective oil and gas businesses in a joint venture, creating a leading independent European exploration and production company with international operations in core regions. LetterOne contributed all shares in DEA Deutsche Erdöl AG to Wintershall Holding GmbH and received new shares in the latter. The company was renamed Wintershall Dea GmbH. Including preference shares, BASF has a shareholding of 72.7% in Wintershall Dea GmbH. No later than 36 months after closing but in all cases before an IPO, these preference shares will be converted into ordinary shares in Wintershall Dea GmbH. From the signing of the agreement in September 2018 until the closing of the merger, BASF’s oil and gas business was reported as a discontinued operation. Since the merger, BASF’s interest in Wintershall Dea GmbH has been accounted for using the equity method. The gain from the transition from full consolidation to the equity method is reported in income after taxes from discontinued operations. Since May 1, 2019, BASF has reported its share of Wintershall Dea GmbH’s net income in income from operations of Other.

• On December 6, 2019, BASF India Limited sold its stilbene-based optical brightening agents (OBA) business for paper and powder detergent applications to Archroma India Private Limited, Mumbai, India. The transaction includes the stilbene-based OBA product portfolio and the production plant in Ankleshwar, India. The production plant was part of the Performance Chemicals division and the stilbene-based OBA product portfolio was allocated to the Performance Chemicals and Care Chemicals divisions.
• BASF sold its ultrafiltration membrane business to DuPont Safety & Construction (DuPont) on December 31, 2019. The divestiture includes the shares of inge GmbH, the business’ headquarters and production site in Greifenberg, Germany, including all employees, its international sales force, and certain intellectual property rights which were previously owned by BASF SE. The ultrafiltration membrane business had been part of the Performance Chemicals division.

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, to strengthen the Dispersions & Pigments division.

The following overview shows the effects of the divestitures conducted in 2019 and 2018 on the Consolidated Financial Statements. The sales line item shows the year-on-year decline resulting from divestitures. Noncurrent assets primarily include the addition of investments accounted for using the equity method, while current assets and current liabilities have until now shown the assets and liabilities of the disposal groups. The impact on equity related mainly to gains and losses from divestitures.

Agreed transactions

• On September 18, 2017, BASF had 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 required divesting parts of the original transaction scope to a third-party buyer. These include manufacturing assets of Solvay for engineering plastics in Europe. Domo Chemicals was approved by the E.U. Commission as the buyer of the European polyamide business. The transaction closed on January 31, 2020.

• On August 29, 2019, BASF and the fine chemicals company DIC, Tokyo, Japan, reached an agreement to transfer the global pigments business. The purchase price on a cash and debt-free basis is €1.15 billion. The transaction is expected to close in the fourth quarter of 2020. The sale is subject to approval by the relevant antitrust authorities. The transaction affects the Dispersions & Pigments division and approximately 2,600 employees.
• On December 21, 2019, BASF and a subsidiary of Lone Star, Dallas, Texas, a global private equity firm, signed an agreement for the sale of BASF’s construction chemicals business. The purchase price on a cash and debt-free basis is €3.17 billion. The transaction is expected to close in the third quarter of 2020, subject to the approval of the relevant antitrust authorities. The planned sale affects more than 7,000 employees as well as production sites and sales offices in more than 60 countries in the former Construction Chemicals division.