The wash up from the super-sized merger of farm chemical and seed industry giants Bayer and Monsanto continues, with BASF seizing another chance to buy more assets offloaded by Bayer CropScience.
The new acquisitions, worth about $2.7 billion, include Bayer’s canola seed and research business in Australia and all Bayer’s Nunhems vegetable seeds business, offered for sale in March.
Also in the deal are European glyphosate-based herbicides; various seed treatment lines including Poncho and Votivo; a hybrid wheat research program; broad spectrum herbicide and nematicide research projects, and a digital farming platform.
We are implementing the corresponding undertakings made to the European Commission to allow the successful closing of the Monsanto transaction
- Werner Baumann, Bayer
The planned acquisition follows BASF’s move late last year to pay about $8.8b for parts of Bayer’s seed and non-selective herbicide businesses, including operations in Australia such as the LibertyLink technology for herbicide tolerance.
The new deal comes after regulatory bodies in Europe and the US told German-based Bayer to offload more assets and avoid competition concerns relating to its proposed $80b takeover of the US-based Monsanto.
“We are implementing the corresponding undertakings made to the European Commission and other regulatory authorities to allow the successful closing of the Monsanto transaction,” said Bayer’s board of management chairman, Werner Baumann.
A strong buyer
He regarded BASF as a strong buyer which would serve the needs of growers and give Bayer employees long-term prospects.”
Bayer’s latest sell-off to BASF includes about 1800 staff.
The lingering Bayer-Monsanto deal is the last of three big agricultural transactions announced two years ago.
The US-based DuPont and Dow Chemical companies merged last year, as did Swiss-UK seed and chemical giant, Syngenta, and its new parent, ChemChina.
The Bayer businesses offered to BASF in the past six months have combined sales of $3.5b in 2017.
Their all-cash combined purchase value will be almost $12.2b.
BASF said they would complement its own crop protection business and biotechnology activities, adding new capabilities and opportunities for profitable growth and innovation.
“With this acquisition, BASF will become an even better partner for farmers by strengthening our crop protection portfolio and entering the seeds business in key agricultural markets,” said board chairman, Dr Kurt Bock.
BASF’s crop protection division president, Markus Heldt, said the transactions would give BASF a total of 12,000-plus employees working in agriculture “to connect innovative thinking with practical action to help our customers increase yields, crop quality and profitability”.
Biological growth, too
Although its latest purchases have centred on conventional crop protection chemistry, BASF is also ambitious with plans for the biological crop protection market.
Mr Heldt, who was in Australia earlier this year, said while conventional chemistry represented more than 96 per cent of the world’s $80b a year, herbicide, insecticide and fungicide market turnover was growing at less than 2pc annually.
That compared with at least 11pc annual growth bio-fungicide and bio-insecticide sales.
It’s taken a couple of years, but there are increasing opportunities in the biological crop care market.
- Markus Heldt, BASF
“We see a lot of scope for biologicals,” he said.
BASF now had a “second wave of bio performance products” set to deliver a better complementary fit with the company’s chemistry lines.
Last year BASF significantly expanded its functional crop care research and development efforts in Germany following its 2013 acquisition of the US-based Becker Underwood biological crop products business.
That acquisition included a formulation plant in NSW which has just been upgraded to produce the biological pesticide Velifer for protected horticulture markets overseas.
Velifer will also sell in Australia when registered next year.
Strategic plan
“Investment in the plant at Somersby is part of our a strategic and clear plan to increase our capacity and capability on the biological front,” Mr Heldt said.
“When we bought Becker Underwood we had to spend some time understanding bio-products and how they would fit into our portfolio and how to optimise their use.
“It’s taken a couple of years, but there are increasing opportunities in this market.”
The fruit and vegetable industry was particularly fertile ground for integrated pest management program products because of increasing pressure from retailers and consumer interest in biologically production methods.
“Supermarkets are aware of the mood and they want to differentiate the product proposition they can offer to shoppers,” he said.
“There’s more scope for cranking up integrated pest management product capacity in Australia and at our sites in South Africa and in the UK.”
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