BASF Signals Readiness to Snap Up Assets Amid Consolidation Wave

  • $12.8 billion worth of assets could come up for sale: Kepler
  • BASF says portfolio, pipeline give strong competitive position

BASF SE signalled it’s ready to snap up any assets that come up for sale as the biggest wave of consolidation seen in the agrochemical industry approaches a critical juncture.

“If we see the right target at the right price” the funds will be made available, Markus Heldt, head of BASF’s crop protection unit, said at a press briefing in Ludwigshafen, Germany, where the world’s largest chemical maker is based.

BASF’s comments come just hours after Bayer AG of Germany sweetened its takeover bid for Monsanto Co. a second time, saying it’s in advanced talks to acquire the U.S. seed giant in what would be the largest agriculture-related takeover. China National Chemical Corp. agreed in February to acquire Syngenta AG while U.S. competitors DuPont Co. and Dow Chemical Co. plan to merge and then carve out a new crop-science unit. There are at least 11.5 billion euros ($12.8 billion) worth of assets coming onto the market because of consolidation, according to Christian Faitz, an analyst at Kepler Cheuvreux.

“BASF would benefit quite a bit from regulatory requirements to dispose of assets -- being one of the only strategic bidders in the market,” Faitz said in a note to clients on Tuesday. “BASF could, with little effort but a bit of pocket money, build out its own integrated franchise.”

The shares were little changed at 73.23 euros as of 12:39 p.m. in Frankfurt, valuing the company at 67 billion euros.

Research Cooperation

Assets that may come on the market are Dow’s corn, soya, sunflower and canola seeds businesses as well as Bayer’s LibertyLink franchise of traits and herbicides, Faitz said. Executives at BASF declined to say how much money the German chemical maker would be prepared to spend on agricultural assets.

Monsanto is evaluating the Bayer offer and proposals from other parties, it said. The U.S. company approached BASF earlier this year about merging its operations with the chemical maker’s crop protection unit in return for a stake in the combined entity, people familiar with the matter said at the time. BASF board member Harald Schwager said on Tuesday that the agricultural unit is an “integral part” of the company.

BASF has agreements for research cooperation in seeds with companies including Monsanto and reiterated that a potential tie-up between Bayer and the U.S. company won’t affect that.

“We see opportunities to add on with acquisitions as they come along either from the mergers or as we are evaluating other alternative and strategic partnerships,” Heldt said. “We have no doubt that BASF is willing and able to invest short and long term to grow our business on a global level.”

The company’s portfolio, pipeline and ability to understand farmers’ needs gives it a solid competitive position, BASF said. Peak sales from the company’s innovation pipeline are expected to be 3 billion euros over the decade until 2025, it said.

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