BASF Reluctant to Join Frenzy of Deals in Agricultural Chemicals

February 26, 2016 07:49 AM
BASF Reluctant to Join Frenzy of Deals in Agricultural Chemicals

BASF SE Chief Executive Officer Kurt Bock said he considered a deal in the field of agricultural chemicals amid China’s takeover of Syngenta AG and the merger of Dow Chemical Co. and DuPont Co before deciding to stay put.

“We look at the industry and try to understand what is our position,” Bock said in a Bloomberg Television interview on Friday in Ludwigshafen, Germany, where the company is based. “We feel comfortable with what we have. You have to look at multiples, price expectations in the market, and have to make up your mind whether that is something which is really creating value or not.”

BASF was left on the sidelines after its two biggest rivals in the U.S. announced a $130 billion merger and ChemChina agreed to buy Switzerland’s Syngenta for about $43 billion. Monsanto Co.’s unsuccessful approach for Syngenta sent ripples through the industry as the other top suppliers of herbicides, genetically modified seeds and other products raced to calculate the implications of such a tie-up.

Before Syngenta’s tie up with ChemChina, BASF discussed various options including a full and partial acquisition of its Swiss peer, according to people familiar with the matter. Under one plan, the German company would have contributed its agricultural business plus some cash to Syngenta in return for a majority stake in the enlarged company, said people familiar with the matter, who asked not to be identified because the plans weren’t public.

The German company would’ve likely sought an exemption from Swiss regulators from making a mandatory takeover offer to Syngenta shareholders, one of the people said.

BASF had also secured financing to make a counteroffer for all of Syngenta as other rivals pursued a takeover, the people said. Monsanto withdrew its bid in August after being rebuffed by Syngenta’s management. BASF and Monsanto also discussed joining forces to take over Syngenta, the people said. In the end, Syngenta opted for the all-cash offer from the Chinese.

A BASF representative declined to comment.

Changing Industry

“We have a clear strategy to grow the company; this includes M&A and portfolio management,” Bock said in the television interview. “Yes, our industry is changing. Whether it is strengthening the industry or whether it is just rearranging the chairs around the table needs to be seen. In ag, obviously there has been some consolidation, but from my point of view, the acquisition, nationalization of Syngenta is not changing industry structure.”

BASF said Thursday it will halve the research workforce at its plant biotechnology operation as it narrows its focus on projects with the most profit potential. The cutbacks will lead to 320 jobs lost in in North America and Europe.

“We made a clear decision about 10 to 15 years ago not to enter the seed business,” Bock said. “We have a strong and good collaboration with Monsanto which is working out quite nicely and we feel very comfortable with the business that we have.”

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Spell Check

Chappell, NE
2/29/2016 09:55 AM

  When BASF charges over $500/gal for Beyond what more do they need?


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