Material Investments and Portfolio Measures

By investing in our plants, we create the conditions for the profitable growth we strive for while constantly improving the efficiency of our production processes. For the period from 2020 to 2024, we have planned capital expenditures (capex)¹ totaling €23.6 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 nearly 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. A framework and investment agreement for the project was signed with Guangdong Provincial Government in January 2019. We also plan to expand the site we operate together with our partner Sinopec in Nanjing, China.

In addition, we are refining our portfolio through acquisitions that promise above-average profitable growth as part of the BASF Verbund to help reach a relevant market position. A key consideration is that these 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 €3,839 million in property, plant and equipment in 2019 (previous year: €3,615 million). Capex¹ accounted for €3,349 million of this amount (previous year: €3,498 million). Our investments in 2019 focused on the Chemicals, Materials, Surface Technologies and Nutrition & Care segments.

In Europe, we strengthened 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. We also built 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. Construction continued for another production plant for vitamin A, which is scheduled for startup in 2021. In Antwerp, Belgium, we are expanding our ethylene oxide complex.

In North America, we continued construction of a MDI synthesis unit in Geismar, Louisiana. Startup is scheduled for 2020. We are expanding the output of the ibuprofen plant in Bishop, Texas.

In Asia, we started construction of the first plants at the planned integrated Verbund site in Zhanjiang, China, in 2019. The first production facilities are scheduled for completion in 2022. We started up a plant for plastics additives in Shanghai, China. These investments strengthen our presence in Asia.

Additions to property, plant and equipment^a by segment in 2019

Additions to property, plant and equipment^a by region in 2019

Acquisitions

We added €3 million worth of property, plant and equipment through acquisitions in 2019. Additions to intangible assets was negative, at minus €37 million, due to the adjustment of the purchase price allocation for the businesses acquired from Bayer.

On September 26, 2019, we acquired Isobionics B.V., Geleen, Netherlands, an innovation leader in biotechnology. The company develops and produces a wide range of natural flavors and fragrances. The acquisition strengthens the Nutrition & Health division.

Divestitures

On January 31, 2019, BASF and Solenis completed the transfer of BASF’s paper and water chemicals business to Solenis as announced in May 2018. Since February 1, 2019, we have held a 49% share in Solenis, which is accounted for using the equity method. An equity-accounted interest in the amount of €590 million was added in this connection.

Following the approval of all relevant authorities, BASF and LetterOne completed the merger of Wintershall and DEA effective May 1, 2019. In September 2018, BASF and LetterOne had signed a transaction agreement to merge their respective oil and gas businesses in a joint venture. Shareholder loans were replaced by bank loans in the course of the merger. BASF and LetterOne intend to list Wintershall Dea on the stock exchange by way of an initial public offering (IPO) in the second half of 2020, provided market conditions are suitable. Since May 1, 2019, BASF’s 72.7% interest in Wintershall Dea has been reported in the Consolidated Financial Statements of the BASF Group according to the equity method, with an initial valuation at fair value. The gain of €5.7 billion from the transition from full consolidation to the equity method is included in income after taxes from discontinued operations for the second quarter of 2019.

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 production plant was part of the Performance Chemicals division and the stilbene-based OBA business was allocated to the Performance Chemicals and Care Chemicals divisions.

We completed the sale of the 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 intangible assets. The ultrafiltration membrane business had been part of the Performance Chemicals division.

Agreed transactions

In September 2017, we signed an agreement with Solvay on the acquisition of Solvay’s global polyamide business, subject to the approvals 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 Solvay’s production plants in the engineering plastics field in Europe. Domo Chemicals, Leuna, Germany, was approved by the E.U. Commission as the buyer. The transactions between Solvay and BASF and Solvay and Domo Chemicals closed on January 31, 2020. BASF acquired the polyamide business for a purchase price of €1.3 billion (on a cash and debt-free basis) and will integrate it into the Performance Materials and Monomers divisions. In addition to eight production sites in Germany, France, China, India, South Korea, Brazil and Mexico, the acquisition includes research and development and technical consultation centers in Asia and the Americas.

On August 29, 2019, BASF and DIC, Tokyo, Japan, reached an agreement on the acquisition of BASF’s global pigments business. The purchase price on a cash and debt-free basis is €1.15 billion. The assets and liabilities to be divested were reclassified to a disposal group in the Dispersions & Pigments division as of this date. The transaction is expected to close in the fourth quarter of 2020, subject to the approval of the relevant competition authorities.

On December 21, 2019, we signed an agreement with an affiliate of Lone Star, a global private equity firm, on the sale of our 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 competition authorities. The planned sale comprises the Construction Chemicals division, including more than 7,000 employees and production sites and sales offices in more than 60 countries. The business generated sales of €2,553 million and EBITDA of €214 million in 2019. On signing of the agreements, a disposal group was established and the statement of income adjusted retroactively as of January 1, 2019, and for the comparative year 2018. Until closing, the income after taxes of the construction chemicals business will be presented in the income after taxes of BASF Group as a separate item (“Income after taxes from discontinued operations”).