2.4 – Acquisitions and divestitures

Acquisitions

In 2016, BASF acquired the following activities:

• On September 26, 2016, BASF concluded the acquisition of Guangdong Yinfan Chemistry (“Yinfan”), Jiangmen, China, and integrated the activities in the Coatings division. This acquisition enabled BASF to add the Yinfan product range to its portfolio of automotive refinish coatings in Asia Pacific and gain access to a state-of-the-art production plant for automotive refinish coatings in China
• On December 14, 2016, BASF concluded the acquisition of the global surface treatment provider Chemetall from Albemarle Corporation, Charlotte, North Carolina. The acquisition supplements the Coating division’s portfolio in the area of customized technology and system solutions for the treatment of surfaces. The purchase price, subject to usual adjustments to the net net financial debt and net working capital, amount to $3.1 billion

The preliminary fair values of the assets and liabilities of Chemetall as of December 14, 2016, were as follows:

Goodwill in the amount of €1,545 million resulted primarily from sales synergies, arising from the expansion of the portfolio as well as cost synergies to a minor extent. Chemetall contributed €32 million to sales in the fiscal year 2016 and minus €5 million to net income. With the consolidation of Chemetall in the Consolidated Financial Statements of BASF as of January 1, 2016, sales would have amounted to €768 million and net income €77 million. These proforma results are for comparison purposes and do not necessarily represent the results had the transaction taken place on January 1, 2016, and are not indicative of future developments and results.

The purchase prices for businesses acquired in 2016 totaled €2,872 million; as of December, 31, 2016, payments made for these amounted to €2,849 million. The purchase price allocations were based on valuations in accordance with IFRS 3. The resulting goodwill amounted to €1,552 million.

The purchase price allocations consider all the facts and circumstances prevailing as of the respective dates of acquisition which were known prior to the preparation of the Consolidated Financial Statements. In accordance with IFRS 3, should further facts and circumstances become known within the 12-month measurement period, the purchase price allocation will be adjusted accordingly.

In 2015, BASF acquired the following activities:

• On February 12, 2015, BASF concluded the acquisition, announced on December 8, 2014, of the business from Taiwan Sheen Soon Co., Ltd. (TWSS), Lukang Town, Taiwan. TWSS is a leading manufacturer of precursors for adhesives based on thermoplastic polyurethanes (TPU). Following receipt of the official approval, BASF also took over TWSS’s activities on the Chinese mainland, effective December 1, 2015. The takeover consolidated BASF’s market position in the areas of TPU extrusion and injection molding for various industries. BASF can now offer its customers complete solutions for TPUs and TPU adhesives. At BASF, the activities have been integrated in the Performance Materials division
• On February 18, 2015, BASF took over technologies, patents and know-how for silver nanowires from Seashell Technology LLC, based in San Diego, California. Through this acquisition, BASF has extended its product portfolio for displays in the Electronic Materials business unit, which is part of the Monomers division
• On February 24, 2015, BASF acquired a 66% share from TODA KOGYO CORP., based in Hiroshima, Japan, in a company to which TODA had contributed its business with cathode materials for lithium-ion batteries, patents and production capacities in Japan. The transaction had been announced on October 30, 2014. The company focuses on the research, development, production, marketing and sales of a number of cathode materials. At BASF, the activities were assigned to the Catalysts division
• On March 31, 2015, BASF concluded the acquisition of the polyurethane (PU) business from Polioles, S.A. de C.V., based in Lerma, Mexico, that was announced on July 10, 2014. Polioles is a joint venture with the Alpek Group. BASF holds a 50% share, which is accounted for using the equity method. The acquisition comprised marketing and selling rights, current assets, and to a minor extent, production facilities. The business has been assigned to the Performance Materials division
• On April 23, 2015, BASF concluded an agreement with Lanxess Aktiengesellschaft, based in Cologne, Germany, on the acquisition and use of technologies and patents for the production of high-molecular-weight polyisobutene (HM PIB). The transaction furthermore included the acquisition of selling rights and current assets as well as a manufacturing agreement in which Lanxess will produce HM PIB exclusively for BASF. The activities were allocated to the Performance Chemicals division

The following overview shows the effects of the acquisitions conducted in 2016 and 2015 on the Consolidated Financial Statements. If acquisitions resulted in the transfer of assets or the assumption of additional liabilities, these are shown as a net impact.

Divestitures

In 2016, BASF sold the following activities:

• On June 30, 2016, BASF concluded the sale of its global polyolefin catalysts business to W. R. Grace & Co., Columbia, Maryland. The transaction involved technologies, patents, brands and the transfer of production plants in Pasadena, Texas, and Tarragona, Spain. Around 170 employees transferred to Grace. These activities had been assigned to the Catalysts division
• On August 26, 2016, BASF sold its worldwide photoinitiator business to IGM Resins B.V., Waalwijk, Netherlands. The transaction included technologies, patents, brands, customer relations, business-related contracts, inventories, and a production site in Mortara, Italy. The sale affected 120 employees worldwide
• On December 14, 2016, BASF sold the Coatings division’s industrial coatings business to the AkzoNobel Group. The transaction included technologies, patents and trademarks, customer relations, inventories as well as the transfer of two production sites in England and in South Africa. BASF generated around €300 million in sales in the industrial coatings business in 2015

In 2015, BASF divested the following activities:

• On March 31, 2015, BASF sold its white expandable polystyrene (EPS) business in North and South America to Alpek S.A.B. de C.V., based in Monterrey, Mexico. The sale comprised customer lists and current assets in addition to production facilities in Canada, Brazil, Argentina and the United States. The disposed activities had been part of BASF’s Performance Materials division. The shares in Aislapol S.A., based in Santiago de Chile, Chile, were also sold. Polioles, a joint venture accounted for using the equity method, transferred its white EPS business to Alpek
• On June 30, 2015, BASF concluded the divestiture of its global textile chemicals business to Archroma Textiles S.à r.l., Luxembourg. The portfolio comprised products for pretreatment, printing and coating. The transaction furthermore involved the transfer of the subsidiary BASF Pakistan (Private) Ltd., based in Karachi, Pakistan, completed in the third quarter of 2015. The textile chemicals business had been part of the Performance Chemicals division
• Effective July 1, 2015, BASF sold its 25% share in SolVin to its partner, Solvay. SolVin was established in 1999 by Solvay and BASF for the production of polyvinylchloride (PVC). At BASF, the SolVin investment and the income associated with it had been allocated to the Monomers division
• On September 30, 2015, BASF concluded the agreed-upon sale of portions of its pharmaceutical ingredients and services business to Siegfried Holding AG, based in Zofingen, Switzerland. This involved the custom synthesis business and parts of the active pharmaceutical ingredients portfolio. The transaction comprised the divestiture of the production sites in Minden, Germany; Evionnaz, Switzerland; and Saint-Vulbas, France. At BASF, the activities had been allocated to the Nutrition & Health division
• On November 1, 2015, BASF divested its global paper hydrous kaolin business to Imerys Kaolin, Inc., Roswell, Georgia. The divestiture included the kaolin processing production site in Wilkinson County, Georgia. The activities at BASF had been allocated to the Performance Chemicals division

Asset swap with Gazprom

In its Oil & Gas segment, BASF concluded the swap of assets of equal value with Gazprom on September 30, 2015, with retroactive economic effect to April 1, 2013. As a result of the transaction, BASF received an economic share of 25.01% in blocks IV and V of the Achimov formation of the Urengoy natural gas and condensate field in western Siberia. According to the development plan originally confirmed by Russian authorities, blocks IV and V have total hydrocarbon resources of 274 billion cubic meters of natural gas and 74 million metric tons of condensate. Production is scheduled to start up in 2018.

In return, BASF transferred its shares in the previously jointly run natural gas trading and storage business to Gazprom. This included the 50.02% shares in the following: the natural gas trading company WINGAS GmbH, Kassel, Germany; the storage company astora GmbH & Co. KG, Kassel, Germany, which operates natural gas storage facilities in Rehden and Jemgum, Germany; and WINGAS Holding GmbH, Kassel, Germany, including its share in the natural gas storage facility in Haidach, Austria. BASF also transferred its 50% share in each of the natural gas trading companies Wintershall Erdgas Handelshaus GmbH & Co. KG, Berlin, Germany, and Wintershall Erdgas Handelshaus Zug AG, Zug, Switzerland. Gazprom furthermore became a 50% shareholder in Wintershall Noordzee B.V. in Rijswijk, Netherlands, which is active in the exploration and production of natural gas and crude oil deposits in the North Sea.

The following overview shows the individual components of BASF’s profit realization from the asset swap with Gazprom and the transfer of Wintershall Noordzee B.V.: The final purchase price allocation resulted in an adjustment of the fair value of the shareholding in Wintershall Noordzee B.V. and the compensation payment, and reduced disposal gains by €17 million to €297 million.

The following overview shows the effects of the divestitures conducted in 2016 and 2015 in the Consolidated Financial Statements. The previous year includes the effects of the asset swap with Gazprom. The line item sales reflects the year-on-year decline resulting from divestitures. The impact on equity relates mainly to gains and losses from divestitures.