Friday, October 13, 2017
Source: BloombergMarkets
In its biggest-ever deal, BASF is purchasing Bayer seeds for mainstay crops including cotton and soybean, plus the herbicide brand Liberty, the Ludwigshafen, Germany-based company said on Friday. Other seed deals may follow as BASF expands its expertise, Chief Executive Officer Kurt Bock said on a call with investors.
The purchase marks a change of tack for the world’s biggest chemical company, which until now has watched from the sidelines as $160 billion worth of deals created integrated seed and agrochemical giants like DowDupont Inc. In the past, Bock questioned the returns from the large-scale investments needed to develop and promote GM crop traits. In the competition for the Bayer assets, he beat out Syngenta AG, which was acquired by China National Chemical Corp. for $46 billion last year, people familiar with the situation have said.
BASF is paying 15 times earnings before interest, taxes, depreciation and amortization, said Mayer, adding the price is below the valuation paid in previous transactions. BASF said the deal will be earnings per share accretive in the first year.
Central to the deal was the cultural fit between the two German companies and the research capability included in the package that makes it a viable asset, Bock said on the call with investors.
For now, shareholders remain ambivalent toward the strategy shift. BASF stock was 0.3 percent higher at 89.56 euros as of 1:52 p.m. in Frankfurt. Bayer rose 1.3 percent to 118.35 euros.
Read more in BloombergMarkets.