BASF sows seeds with $7bn Bayer deal

by Richard Summerfield

German chemicals giant Bayer is to sell parts of its crop science business to BASF for about $7bn, the companies have announced. The deal has been designed to assuage the concerns of the EU competition authority over Bayer’s planned $66bn acquisition of US agrochemical and agricultural biotechnology corporation Monsanto Company.

The deal will see BASF pay in cash for “significant parts” of Bayer’s seed and herbicide businesses. BASF is paying 15 times earnings before interest, taxes, depreciation and amortisation. BASF said the deal will be earnings per share accretive in the first year.

For BASF, the deal is a surprising one. To date, the company has avoided seed assets and instead pursued research into plant characteristics such as drought tolerance, which it sells or licences to seed developers. However, Bayer’s Monsanto acquisition has opened up opportunities for rival firms. Bayer has confirmed that proceeds from the seed unit sale will help finance the Monsanto acquisition.

“With this acquisition, we are seizing the opportunity to purchase highly attractive assets in key row crops and markets. We look forward to growing these innovative and profitable businesses and to welcoming the experienced and dedicated team in crop protection, seeds and traits. These businesses are an excellent match for BASF Group’s portfolio,” said Dr Kurt Bock, chairman of the board of executive directors of BASF SE, in a statement.

“I am very pleased that, in BASF, Bayer has selected an acquirer that, like our company, attaches a great deal of importance to social partnership and values its employees. I welcome the fact that BASF has committed to offering comparable employment conditions for our colleagues,” said Oliver Zühlke, chairman of the Bayer Central Works Council.

In August, the European Commission opened an investigation to assess the proposed acquisition of Monsanto by Bayer under the EU Merger Regulation. Bayer had offered to sell assets worth around $2.5 bn. The European Commission said in August that the divestments offered by Bayer so far did not go far enough and opened an in-depth review of the deal.

News: BASF to buy Bayer units for $7bn

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