BASF: A Cyclic Stock Offers Opportunities In A Volatile Market
Seeking Early Retirement
Seeking Early Retirement
BASF Continues To Execute A Proven Plan
Stephen Simpson, CFA
Stephen Simpson, CFA
Mon, Jul. 25, 11:31 AM
- Total's (TOT -2.5%) stake in German surface finishing and metal plating company Atotech is expected to receive bids of more than €3B ($3.3B) from chemicals firms Umicore (OTCPK:UMICF) and Sinochem by tomorrow's deadline, Reuters reports.
- Arkema (OTC:ARKAF), a former TOT subsidiary, and BASF (OTCQX:BASFY) have looked at Atotech but are seen as unlikely partners, while P-E firms such as CVC, Cinven, BC Partners, Advent, Bain and Carlyle are expected to submit bids, according to the report.
- Atotech, which generates ~$1B in annual sales, is TOT's sole remaining specialty chemicals unit after the sale of Bostik to Arkema in 2014.
Fri, Jul. 15, 5:14 AM
- Even though Bayer (OTCPK:BAYRY) has sweetened the pot in its attempt to win Monsanto (NYSE:MON), analysts suggest the company is likely to reject the roughly $65B offer and could pursue other transactions such as combining with BASF's (OTCQX:BASFY) agro-chemicals unit.
- "I don't think they believe selling for $125 (per share) today is in the best interests of shareholders... and I do believe they are still considering being a consolidator and not a consolidee," said Chris Kapsch, analyst at BB&T Capital Markets.
Thu, Jul. 14, 12:12 PM
- Monsanto (MON +3.2%) spikes higher after Bayer (OTCPK:BAYRY -0.6%) says it increased its takeover offer for the company to $125/share, after its initial $122 bid was rejected.
- The new offer may make a takeover more palatable for MON shareholders but also prompt concerns among Bayer investors about the German company's deepening financial strain.
- Bloomberg reported yesterday that MON had revived talks with BASF (OTCQX:BASFY +3.4%) about a possible combination of their agrochemicals businesses.
Wed, Jul. 13, 5:17 PM
- Monsanto (NYSE:MON) +1.7% AH following a Bloomberg report that it could look to acquire BASF's (OTCQX:BASFY) agrochemicals unit as an alternative to the proposed and rejected takeover offer from Bayer (OTCPK:BAYRY).
- MON is exploring various transactions, including the potential acquisition of BASF’s ag solutions unit, and in return, BASF likely would receive newly issued shares in MON, according to the report.
- MON’s board is said to be split over the merit of potential deals with rivals BASF and Bayer, with some execs eager to remain independent while others prefer a takeover.
Wed, Jun. 29, 2:47 PM
- Universal Display (OLED +1.9%) is higher after agreeing to acquire BASF's (OTCQX:BASFY +2.3%) organic light emitting diode intellectual property assets for ~€87M.
- OLED says the assets include more than 500 issued and pending patents around the world, and are aimed at accelerating development of commercial blue phosphorescent emissive materials.
- Needham reiterates a Buy rating and $69 price target on OLED, saying that combined with last week's acquisition of a contract research firm specializing in advanced materials development, the moves are a good use of cash that could erect additional barriers against competitors as OLED displays gain broader adoption.
- Even as it reiterates a Hold rating, Gabelli notes that light blue and dark blue emitter materials are "the holy grail" of OLED emitter materials, and the company will continue to strive to be able to launch the first commercial light blue and dark blue emitter materials.
Fri, Jun. 17, 7:15 AM
- Albemarle (NYSE:ALB) agrees to sell its Chemetall surface treatment business to BASF (OTCQX:BASFY) for $3.2B.
- ALB acquired Chemetall, a supplier of specialty chemicals used in surface treatment of metals and plastics, as part of its purchase of Rockwood Holdings in 2014.
- ALB says the sale will help it invest “in the future growth of our high-priority businesses,” reduce leverage and return capital to shareholders.
- Chemetall reported $52.5M in EBITDA during Q1, up 14% Y/Y.
Thu, May 19, 11:48 AM
- A Monsanto (MON +4.9%) takeover by Bayer is considered "relatively unlikely" by Jefferies analyst Laurence Alexander, as he expects MON to object to the offer given its conviction in its R&D pipeline and longer-term competitive advantages.
- Alexander thinks shares of Syngenta (SYT -0.5%) and DuPont (DD -0.7%) could be pressured as regulatory scrutiny likely would intensify if MON gets acquired, and BASF (OTCQX:BASFY -1.4%) could fall on investor concerns of a potential counter-bid.
- But the analyst sees a potential MON takeover as positive for shares of Novozymes (OTCPK:NVZMY -0.1%) and FMC Corp. (FMC -0.7%), as "a further roll-up of 'specialty generic' agrichemical assets could entice capital, and FMC would be a plausible anchor for such an attempt."
- Jefferies rates MON as a Hold with a $95 price target.
- Now read Bayer investor "deeply concerned" about move for Monsanto
Wed, May 18, 2:35 PM
- Monsanto (MON -0.6%) slips as President and COO Brett Begemann says talk of a takeover by Bayer (OTCPK:BAYZF, OTCPK:BAYRY) or BASF (OTCQX:BASFY) is "wild speculation," and MON is staying focused on its own strategy.
- "It's all wild speculation because there’s nothing there," the COO tells Reuters at a BMO investor conference in New York.
- MON also says it expects farmers to plant its Xtend soybeans on more than 15M acres in North America next year, and believes the EU will approve imports by late summer or early fall.
- Now read Monsanto suspends new soybean technologies in Argentina
Thu, May 12, 3:37 PM
- Monsanto (MON +8.5%) remains sharply higher though off highs of the day, following headlines that Bayer (OTCPK:BAYRY -4.1%) and BASF (OTCQX:BASFY -1.7%) are considering a possible acquisition of the company.
- Financial Times reports that MON is interested in forming some sort of combination with the agrochemical businesses of either of the two companies but opposes any deal that would turn it into a division of a German company.
- Piper Jaffray analysts say the interest in acquiring MON is mere speculation, seeing a potential joint venture as a more likely outcome as "we believe Monsanto remains committed to building a chemistry business."
- J.P. Morgan believes Bayer would need to raise equity given the size of the deal, and thinks Bayer investors likely would be only lukewarm around the potential deal given limited accretion and investor desire for Bayer to strength its pharma pipeline following recent setbacks.
- Analysts say a MON takeover likely would draw intense scrutiny from global regulators already confronting an unprecedented wave of consolidation in the crop chemicals industry involving the likes of Dow Chemical (DOW +0.8%), DuPont (DD +0.2%) and Syngenta (SYT +0.4%).
- Now read Seed war sparked: Bayer and BASF to battle over Monsanto?
Thu, May 12, 8:13 AM
- Monsanto (NYSE:MON) now +17.7% premarket as Bloomberg reports that Bayer (OTCPK:BAYZF, OTCPK:BAYRY) is exploring a $40B takeover bid for the company.
- Bayer has held preliminary discussions internally and with advisers about how to finance a deal, including potential asset sales, according to the report.
- MON already was moving higher after StreetInsider reported interest in the company from BASF (OTCQX:BASFY).
- A deal would create the world’s largest supplier of seeds and farm chemicals, and boost Bayer and MON amid a wave of consolidation in the industry after Dow Chemical and DuPont announced last year plans to combine operations in a $130B deal while ChemChina agreed in February to buy Syngenta for $43B.
Thu, May 12, 6:56 AM
Mon, Mar. 7, 6:21 PM
- DuPont (NYSE:DD) rose 2.4% in today's trade following reports that BASF (OTCQX:BASFY) is considering a bid for the company, even as DuPont prepares to merge with Dow Chemical (NYSE:DOW).
- "We just don't see it... BASF cannot come up with a more attractive offer" than the current Dow-DuPont deal, Bernstein analysts write, adding that BASF would struggle to raise the expected $72B for a takeover.
- Jefferies' Laurence Alexander notes that BASF has not done large-scale M&A since the end of the last decade, and its reported interest in a potential spoiler bid for DuPont "run aground" on BASF’s return on investment capital, disinterest in equity financing, and credit ratings.
- "The math is terrible for this," Bernstein's Jonas Oxgaard says, also noting that DuPont may be obligated to pay Dow a $1.9B termination fee if it breaks the deal.
- For his part, CNBC's Jim Cramer thinks a DuPont-BASF deal makes no sense "strategically or financially" for either company, although BASF could emerge as a buyer of certain assets Dow-DuPont may be required to divest in order to secure antitrust approval for their merger.
Fri, Mar. 4, 4:38 PM
- DuPont (NYSE:DD) +5.2% AH following a Bloomberg report that BASF (OTCQX:BASFY) is considering a rival takeover bid for the company.
- BASF is working with advisers and banks to examine the merits of making a counter bid for DuPont, which has agreed to a merger with Dow Chemical (NYSE:DOW), according to the report.
- BASF is said to have held talks with DuPont before the merger agreement with Dow, but the talks did not progress.
Tue, Jan. 26, 8:05 AM
- CTFN Contributor Valeria Camerino reports that market observers believe ChemChina's CHF470 (US$462) per share bid ($44B) for 70% of Syngenta (NYSE:SYT) is more likely to pass antitrust scrutiny than a potential merger with Monsanto (NYSE:MON) because there is less overlap. A deal could be reached as soon as next month.
- In December, Syngenta's board turned down Monsanto's $47B offer stating that it significantly undervalued the firm.
- ChemChina is a major player in generic pesticides, but has no appreciable footprint in high-tech herbicides, insecticides, fungicides or seeds. Also Chinese ownership would enhance penetration in key emerging markets. A bump in the road, however, could be the purchase of Syngenta's U.S.-based assets by a Chinese acquirer.
- Syngenta is an attractive target on the basis of its seeds business and first rate crop protection chemicals portfolio. It is the only pure play in Europe in these areas.
- As far as Monsanto is concerned, one observer believes it makes more strategic sense for Syngenta to acquire Monsanto and dispose of the crop protection chemicals business and any required seeds assets, along with the related salesforce and technical support. He feels that Monsanto would be better served by merging with BASF's (OTCQX:BASFY) crop chemical business.
- Previously: Bloomberg: ChemChina moves closer to potential Syngenta deal (Jan. 15)
- Previously: Syngenta talking with Monsanto, ChemChina and others, chairman says (Dec. 22, 2015)
Dec. 11, 2015, 7:07 PM
- Farm groups are calling for regulators to closely scrutinize the proposed merger of Dow Chemical (NYSE:DOW) and DuPont that could give the companies more clout in the markets for seeds and pesticides.
- Chemicals and materials businesses would comprise most of DowDuPont's revenues, but the markets for those products tend to be fragmented; the combined companies' agriculture business would boast big market shares, such as 41% of sales of U.S. corn seeds and related genetics vs. DuPont’s current 35% and Dow’s 6%.
- Also, the merger could cause further deals among the six companies that currently dominate the global market for seed and crop chemicals, a group that also includes Monsanto (NYSE:MON), Syngenta (NYSE:SYT), Bayer (OTCPK:BAYZF, OTCPK:BAYRY) and BASF (OTCQX:BASFY).
- But Dow and DuPont do not appear to expect antitrust problems; DuPont CEO Ed Breen says the companies plan to divest only modestly - “nothing that would move the needle."
Dec. 9, 2015, 12:10 PM
- Any merger between Dow Chemical (DOW +10.5%) and DuPont (DD +12.6%) would have far-reaching consequences for European rivals, prompting a series of moves as pesticide and seed makers scramble to face a combined U.S. giant.
- A merger would make it more likely that Monsanto (MON +0.2%) re-approaches Syngenta (SYT +7.7%), Bernstein analysts say, speculating that a new bid could come in at 485 Swiss francs, more than the 470 cash-and-stock offer withdrawn in August.
- The pressure on MON to defend its position as the biggest seeds player would be "huge" as chemical companies will want to defend or even strengthen their market positions, says MM Warburg's Oliver Schwarz.
- Regulatory hurdles to a merger would require the combined company to sell off some businesses, likely sparking interest from contenders such as BASF (OTCQX:BASFY -0.1%), Schwarz says. “All the big companies that are swimming in this pond would probably be interested in taking over assets that Dow or DuPont would sell."