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Last Update: 03/12/2009
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Part of the audited Consolidated Financial Statements and Management´s Analysis

2 -- Acquisitions/Divestitures

In 2008, BASF acquired Revus Energy ASA, Stavanger, Norway (Revus), an oil and gas exploration and production company listed on the Oslo Stock Exchange with stakes in 60 licenses in Norway and Great Britain. On December 17, 2008, BASF took over control of Revus on the transfer of the tendered shares to a wholly owned subsidiary of Wintershall Holding AG, Wintershall Norwegen Explorations- und Produktions-GmbH. The shares in Revus were acquired as part of a public tender offer. The remaining shares which were not tendered were acquired on December 18, 2008, as part of the squeeze out resulting in BASF taking ownership of all shares in Revus. The minority shareholders are entitled to a compensation payment of €12 million. This amount has been accrued. The total purchase price is €558 million. Since December 22, 2008, Revus Energy ASA has been trading as Wintershall Norge ASA. The following provides an overview of the preliminary carrying amounts and fair values of the acquired assets and liabilities on December 17, 2008.

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Preliminary purchase price allocation of the acquisition of Revus Energy ASA in 2008 (million €)

 

 

Historical
book value

Adjustment to fair value

Fair values at the date of acquisition

Long-term assets

296

420

716

Property, plant and equipment

231

119

350

Goodwill

Other intangible assets

2

301

303

Other long-term assets

63

63

 

 

 

 

Short-term assets

106

106

Inventories

2

2

Other short-term assets

104

104

Total assets

402

420

822

 

 

 

 

Long-term liabilities

193

284

477

Provision for pensions and similar obligations

.

.

Deferred tax liabilities

102

285

387

Financial indebtedness

30

(1)

29

Other liabilities

61

61

 

 

 

 

Short-term liabilities

104

104

Total liabilities

297

284

581

 

 

 

 

Net assets

105

136

241

Goodwill

 

 

317

 

 

 

 

Total purchase price

 

 

558

Thereof incidental acquisition costs

 

 

.

In addition, BASF acquired the following businesses in 2008:

  • BASF acquired Attapulgite Mining, Inc., Attapulgus, Georgia on September 26, 2008. The acquired business provides access to attapulgite ore. Attapulgite is a magnesium aluminium phyllosilicate used mainly as a thickener in coatings.
  • BASF acquired the concrete admixture business of Kejie Admixture Science & Technology Co. Ltd. (Kejie), on December 15, 2008. Kejie is one of the leading producers of concrete admixtures in Guangzhou, the capital of the Guangdong province in South China, and has a wide range of concrete admixtures and intermediate products.
  • BASF concluded the acquisition of Sorex Holdings Ltd., Widnes, Great Britain on December 19, 2008. Sorex is a leading manufacturer of branded chemical and non-chemical products for professional pest management. The transaction includes U.S.-based Whitmire Micro-Gen and U.K.-based Sorex Ltd. It will increase BASF’s presence in the two most important pest control markets worldwide, the United States and Europe.
  • BASF concluded an agreement with Recticel to acquire the company’s worldwide compounds business for polyurethane (PU) systems for glass encapsulation on December 30, 2008. This transaction includes Recticel’s patented aliphatic light stable compounds under the brand name Colofast®.

The purchase price allocations for the individual acquisitions are preliminary and may, according to IFRS, be adjusted when finalized within one year after the date of acquisition.

If Revus Energy ASA had been included in BASF Group Consolidated Financial Statements as of January 1, 2008, the proforma sales would have been €62,482 million and net income would have been €3,348 million. This unaudited proforma information are provided for purposes of comparison only and do not necessarily reflect the results had the transaction had taken place on January 1, 2008. The results reported are not guarantees of future performance.

The remaining acquisitions in 2008 have no material impact on the proforma sales and net income of the BASF Group.

The following shows an overview of the purchase price allocation of the remaining acquisitions in 2008.

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Other acquisitions (million €)

 

 

2008

Purchase price

102

Incidental acquisition costs

.

Total purchase price

102

Net assets at their carrying amounts

(4)

Difference

106

Adjustment to fair value

 

Long-term assets

51

Property, plant and equipment

(9)

Goodwill

Other intangible assets

60

Other long-term assets

 

 

Short-term assets

1

Inventories

1

Other short-term assets

Total assets

52

 

 

Long-term liabilities

 

 

Short-term liabilities

(1)

Total liabilities

(1)

Total adjustments to fair value

51

Deferred tax liabilities on adjustments

(3)

Remaining goodwill/ negative difference

58

In 2007, Wintershall acquired a stake of 25% less one share in OAO Severneftegazprom (SNG), through an asset swap with Gazprom. SNG holds the production license to the Yuzhno Russkoye natural gas field in Western Siberia. By means of an additional preference share, Wintershall holds a 35% share in the economic rewards of this field. In return, Gazprom received a 49% interest in a German company that holds onshore exploration and production rights in Libya. In addition, Gazprom’s stake in our natural gas trading company, WINGAS GmbH & Co. KG, Kassel, was increased from 35% to 50% minus one share. Both the Libyan activities and WINGAS GmbH & Co. KG continue to be consolidated in the BASF Group Consolidated Financial Statements. A cash payment of €598 million was made by BASF to compensate for the assets swapped with Gazprom.

Gazprom’s additional shares have led to an increase in minority interests of €216 million in the balance sheet. The measurement of the swapped assets at fair value of €850 million resulted in an excess of €634 million which was recognized in retained earnings. The assets received comprised a marketing contract for natural gas with a fair value of €1,762 million and shares in SNG with a fair value of €110 million. Measurement at fair value resulted in deferred tax liabilities of €424 million.

In addition, BASF acquired the following companies for a total of €38 million in 2007:

  • Guilin REEcat Catalyst Co., Ltd. was taken over by BASF on April 20, 2007. The Chinese company, which has a production site for small engine and motorcycle catalysts in Guilin, China, has strengthened BASF’s catalysts activities.
  • In addition, BASF acquired the remaining 50% stake in Prodrive Engelhard LLC Wixom, Michigan on July 26, 2007. The company provides services connected with the testing of catalysts.
  • On December 31, 2007, BASF acquired SABIC Innovative Plastics’ shares in the PBT-Joint Venture – BASF GE Schwarzheide GmbH & Co. KG –, Schwarzheide, Germany.

The following overview shows the preliminary purchase price allocations of the acquisitions conducted in 2008, as well as the impact of the final purchase price allocations conducted in 2007 on the consolidated balance sheet.

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Effects of acquisitions in the year of acquisition

 

 

2008

 

2007

 

Million €

%

 

Million €

%

Long-term assets

1,177

4.0

 

34

0.1

Property, plant and equipment

363

2.4

 

17

0.1

Goodwill

380

8.0

 

11

0.3

Other intangible assets

365

7.1

 

6

0.1

Other assets

69

4.3

 

Short-term assets

138

0.6

 

7

.

Thereof cash and cash equivalents

11

0.4

 

1

0.1

Total assets

1,315

2.6

 

42

0.1

 

 

 

 

 

 

Stockholders’ equity

5

.

 

Long-term liabilities

489

3.1

 

2

.

Thereof financial indebtedness

29

0.4

 

Short-term liabilities

173

1.1

 

1

.

Thereof financial indebtedness

31

0.5

 

Total stockholders’ equity and liabilities

667

1.3

 

3

.

Payments related to acquisitions

648

 

 

38

 

Conditional purchase price

12

 

 

 

Purchase price

660

 

 

38

 

Contingent liabilities and other financial obligations

281

3.2

 

1

.

In 2008, BASF divested the following activities:

  • In the course of 2008, BASF sold further parts of the premix business, including sites in Japan, Taiwan, Chile and Columbia. Premixes are a mixture of vitamins and feed additives for animal nutrition. The activities were allocated to the Care Chemicals division.
  • On April 30, 2008, BASF sold the Shreveport, Louisiana, site and the related contract manufacturing business for pharmaceuticals to Dr. Reddy‘s Laboratories. The activities were allocated to the Care Chemicals division.
  • On August 17, 2008, BASF completed the divestiture of Seal Sands site in the north of England to INEOS Nitriles. The Seal Sands site operates production facilities for the intermediates acrylonitrile (AN), adipodinitrile (ADN) and hexamethylenediamine (HMD), as well as for by-products. The site was allocated to the Performance Polymers division.

In 2007, BASF divested the following activities:

  • On June 26, 2007, BASF concluded the divestiture of Chemische Fabrik WIBARCO GmbH to Hansa Chemie International AG, Zollikon-Zurich, Switzerland. The company, headquartered in Ibbenbüren, North Rhine-Westphalia, was assigned to the Performance Chemicals division.
  • On July 1, 2007, BASF sold its stake in an ethane cracker in Geismar, Louisiana to Williams Olefins, LLC. The associated infrastructure was sold to PetroLogistics, LLC.
  • On October 31, 2007, BASF sold a major part of its premix business to Nutreco, an animal feed group headquartered in the Netherlands. The divested business had sites in eight countries.

The following shows the effects of the divestitures in 2008 and 2007 on the consolidated balance sheet. The effect on stockholders’ equity is reported as the difference between the purchase price payment and the disposed assets. Any expenditures for restructuring measures connected with divestitures are not included.

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Effects of divestitures in the year of divestiture

 

 

 

2008

 

2007

 

Million €

%

 

Million €

%

Sales

(274)

(0.4)

 

(146)

(0.3)

 

 

 

 

 

 

Long-term assets

(12)

.

 

(55)

(0.2)

Thereof Property, plant and equipment

(11)

(0.1)

 

(43)

(0.3)

Short-term assets

(24)

(0.1)

 

(60)

(0.3)

Thereof cash and cash equivalents

 

(3)

(0.4)

Total assets

(36)

(0.1)

 

(114)

(0.2)

 

 

 

 

 

 

Stockholders’ equity

30

0.2

 

26

0.1

Long-term liabilities

 

(5)

.

Thereof financial indebtedness

 

Short-term liabilities

7

.

 

(33)

(0.3)

Thereof financial indebtedness

 

(1)

.

Total stockholders’ equity and liabilities

37

0.1

 

(13)

(0.1)

Proceeds from divestitures

73

 

 

102

 

Contingent liabilities and other
financial obligations

 

(1)

.

Assets and liabilities of disposal groups

As of December 31, 2007, parts of the Styrenics division were classified as a disposal group. These concerned BASF’s styrene monomer (SM), polystyrene (PS), styrene butadiene copolymer (SBC) and acrylonitrile butadiene styrene (ABS) businesses with plants in Antwerp, Belgium; Altamira, Mexico; Sao Jose dos Campos, Brazil; Ulsan, South Korea; and Dahej, India.

In 2008, the planned sale could not be carried out. Due to poor macroeconomic conditions and the changes on the capital market, divestiture in the near future is not highly probable. As of December 31, 2008, the assets and liabilities of the disposal group were reported under continuing operations.

In the fourth quarter of 2008, €73 million in depreciation and amortization had to be recognized for 2008, as the assets were no longer classified as a disposal group. In addition, impairment charges of €121 million were recognized in connection with the restructuring of the business, particularly for the sites in Mexico and South Korea.

All the depreciation and amortization for 2007 were reflected in the earnings for that year. Consequently, due to the reclassification of the disposal group no adjustment had to be made due to depreciation and amortization for 2007.

The values of the disposal group as of December 31, 2007, are shown in the following table.

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Disposal group of the Styrenics division (million €)

 

 

Dec. 31, 2007

Intangible assets

59

Property, plant and equipment

363

Inventories

175

Accounts receivable, trade

10

Other receivables and miscellaneous short-term assets

4

Cash and cash equivalents

3

Assets of the disposal group

614

Provisions for pensions and similar obligations

15

Accounts payable, trade

1

Other liabilities

1

Liabilities of the disposal group

17

Planned Acquisitions/Divestitures

On September 15, 2008, BASF announced its intention to acquire Ciba Holding AG (Ciba). On October 1, 2008, a public tender offer of CHF 50.00 per share was made to the shareholders of Ciba.

On November 13, 2008, the Spanish investor group Bestinver sold its stake of approximately 13% in Ciba to BASF at a price of CHF 49.50 per share outside the public tender offer. BASF provided assurance to Ciba that it will not exercise the voting rights attached to these shares before the completion date. In the 2008 Consolidated Financial Statements, the shares already held by BASF before the announcement of the public tender offer, the additional shares acquired in the course of 2008, as well as the shares in Ciba acquired from the Bestinver Group amounted to €351 million and were reported under long-term securities. This corresponds to a stake in Ciba of 15.2%.

The shares tendered as part of the public tender offer, the shares already held by BASF, the shares in Ciba acquired from the Bestinver Group and the Ciba shares held by Ciba would result in a BASF stake of 95.2%. The completion of the transaction is still subject to approval by the relevant antitrust authorities, which is expected in the first quarter of 2009. After payments to minority shareholders on the transfer of control, the total purchase price will amount to €2.2 billion (CHF 3.4 billion).

The expected purchase price payment of €1,797 million to be paid as part of the public tender offer after the approval by the relevant antitrust authorities is reported under other financial obligations.
More information can be found in Note 23

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