BASF Sees Likely Insecticide Tie-Ups as Big Crop Deals Ruled Out
BASF SE (BAS), the world’s largest chemical maker, will seek more partnerships to improve its insecticide offerings as high prices in the crop-protection field make big takeovers unlikely.
The company may look to exchange its expertize in fungicides for knowledge in the insecticides segment, said Markus Heldt, head of the crop protection division based in Limburgerhof, Germany.
“There is a relative weakness in our portfolio right now when it comes to insecticides,” Heldt said at a media event, adding that targets should not endanger a margin goal of 25 percent. “The big players are not interested in divesting their plant protection units. We look at smaller deals to add technology and competencies.”
BASF said today it plans to boost revenue at the crop-protection division to 8 billion euros by 2020, 2 billion euros more than an earlier goal. The unit had some 4.7 billion euros in sales last year, and the expansion to the end of the decade can be achieved without deals, Heldt said. The Ludwigshafen, Germany-based company already has exclusive rights to develop and commercialize an insecticide outside of Japan, Taiwan and South Korea for Meiji Seika Kaisha Ltd.
“In 2003 we greatly increased our research and development activities in insecticides, but it takes far longer,” Heldt said. “Because of the regulatory situation it’s a lot more difficult.”
BASF plans to build a crop-protection chemical plant in China’s Jiangsu Province, its first in Asia, as growing food needs in the region boost demand for herbicides, it said in May. The company, which spends 9 percent of revenue on research and development at its insecticide, herbicide and fungicide unit, is doubling its average annual spend on additional production sites to 300 million euros.
The chemical maker is counting on Asia to be one of the main growth drivers to help it achieve a goal of 110 billion euros in revenue by the end of the decade. Within crop protection, emerging markets as a whole should generate 50 percent of sales within a few years compared with about 43 percent currently.
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