3. Acquisitions and Divestitures

Acquisitions

No activities were acquired in 2022.

In 2021, BASF acquired the following activities:

• Since August 31, 2021, BASF and Shanshan, a lithium-ion battery materials provider in China, have held shares in BASF Shanshan Battery Materials Co., Ltd. The company is majority-owned by BASF (BASF 51%; Shanshan 49%). It occupies a very strong position in the value chain for battery materials including raw materials, precursors for cathode active materials, cathode active materials and battery recycling. It focuses primarily on the electric vehicle market as well as the consumer electronics and energy storage segments. Through this investment, BASF has further strengthened its position in Asia to create an integrated global supply chain for battery materials for customers in China and worldwide. The investment strengthened the Catalysts division. The transaction includes four companies and approximately 1,600 employees. One of the companies was classified as an investment accounted for using the equity method, but for reasons of materiality, is recognized in BASF’s financial statements at cost. The purchase price was €616 million and was cash-effective in full. A separate transaction valued at €36 million was connected to the purchase in accordance with IFRS 3.51 and was reported under other receivables. It contains a compensation component which is coupled with the retention of employees at the acquired companies. It affects a period of one or two years. The first tranche was fulfilled and disbursed to employees in 2022; the disbursement for the second tranche will occur when the commitment has been fulfilled in 2023. Goodwill of €254 million resulted in particular from sales and cost synergies and was not tax deductible. The preliminary purchase price allocation for this transaction was reviewed at the end of the 12-month valuation period pursuant to IFRS 3. It did not lead to any adjustments.
• Furthermore, BASF completed the purchase of 49.5% of Vattenfall’s Hollandse Kust Zuid wind farm on September 1, 2021. The transaction was not reported as an acquisition because the acquired assets did not constitute a business in accordance with IFRS 3.2b, so it was not within the IFRS 3 scope of application. The transaction is therefore not included in the following table.

The following overview shows the effects of acquisitions in 2021 on the Consolidated Financial Statements. When acquisitions resulted in the transfer of assets or the assumption of additional liabilities, the effects are shown as net amounts. The disclosures in 2022 relate to the fulfillment of the first tranche of the compensation component agreed as part of the formation of BASF Shanshan Battery Materials Co., Ltd. and the payment of a purchase price adjustment for the polyamide business acquired in 2020.

Divestitures

In 2022, BASF sold the following activities:

• On April 12, 2022, BASF completed the sale of a 51% share in HKZ Investor Holding B.V., Arnhem, Netherlands, the holding company for the investment in the Hollandse Kust Zuid (HKZ) wind farm, to Allianz Capital Partners, Luxembourg, acting as party to the contract on behalf of Allianz Insurance Companies. Since then, BASF’s remaining shares in HKZ Investor Holding B.V. have been accounted for using the equity method. The proportional net income is presented in the BASF Group’s income from operations. The integral investment is not allocated to any division but reported under Other. The disposal group of the wind farm investment was derecognized in April 2022 when the shares were sold. The disposal gain includes the gain from the transition from full consolidation to the equity method and is likewise presented in income from operations. The calculation is summarized in the table below:

• On September 30, 2022, BASF closed the divestiture of its kaolin minerals business to KaMin, a global performance minerals company headquartered in Macon, Georgia, following approval by the relevant authorities. The divestiture comprised the production hub with sites in Daveyville, Toddville, Edgar, Gordon and related mines, reserves and mills in Toomsboro and Sandersville in Georgia. The refinery catalysts production located at the same site remained part of BASF operations and was not included in the divestiture. The kaolin minerals business was allocated to the Performance Chemicals division. The disposal group of the kaolin minerals business was derecognized in September 2022 when the transaction closed. The calculation of the disposal loss is presented in the following table:

• On October 31, 2022, BASF completed the sale of its production site in Quincy, Florida, and the associated attapulgite business in the Dispersions & Resins division to Clariant Corporation, Louisville, Kentucky. The Quincy site employed around 75 employ­ees and manufactures clay-based mineral products used in a variety of industrial applications. The purchase price was $60 million.

In 2021, BASF sold the following activities:

• On May 31, 2021, BASF completed the sale of its production site in Kankakee, Illinois, to a subsidiary of One Rock Capital Partners, LLC. The transaction also included the vegetable-oil-based sterols and natural vitamin E business as well as the anionic surfactants and esters produced at the Kankakee site. The purchase price was €177 million. The transaction affected the Nutrition & Health and Care Chemicals divisions.
• Following the fulfillment of clearance conditions, BASF closed the divestiture of its global pigments business to DIC, Tokyo, Japan, on June 30, 2021. The purchase price on a cash and debt-free basis was €1.15 billion. The transaction affected approximately 2,500 employees in the former Dispersions & Pigments division. The disposal group of the pigments business was derecognized when BASF’s global pigments business was sold to DIC, Tokyo, Japan, on June 30, 2021.
• On November 9, 2021, BASF and Clayton, Dubilier & Rice sold their shares in Solenis to Platinum Equity, Beverly Hills, California. With over 5,200 employees, Solenis serves customers in water-intensive industries by helping them solve complex water treatment and process improvement challenges. BASF held a 49% share in Solenis after having transferred its wet-end paper and water chemicals business to the company in February 2019. The share in Solenis was accounted for using the equity method. The remaining 51% of the shares were held by funds managed by Clayton, Dubilier & Rice, and by Solenis management. The purchase price allocated to BASF was around €1.1 billion. The investment was classified as non-integral. Its earnings and the gain on the disposal in the amount of €589 million were reported under net income from shareholdings.
• On November 30, 2021, BASF completed the sale of the precision microchemicals business to Entegris, Billerica, Massachusetts. The transaction included fixed assets and inventories; the purchase price was €78 million. The precision microchemicals business was part of the Surface Treatment global business unit in the Coatings division, operating under the Chemetall brand.

The following overview shows the effects of the divestitures in 2022 and 2021 on the Consolidated Financial Statements. The sales line item showed the year-on-year decline resulting from divestitures. The impact on equity related mainly to gains and losses from divestitures.

Agreed transactions

On July 19, 2022, BASF and ASC Investment Sarl, Luxembourg, signed an agreement on the sale of BASF’s production site in De Meern, Netherlands, to ASC. The site produces nickel-based catalysts and is part of the Catalysts division. The transaction mainly covers production facilities, including the associated infrastructure and inventories, as well as the transfer of the employees working at the site. With the agreement on the sale, the affected assets were tested for impairment. To that end, the fair value less expected cost of disposal was determined and compared with the carrying amount of the assets. This resulted in the need for impairment in the amount of €95 million as of December 31, 2022. The transaction is expected to close in the first quarter of 2023.