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
Wed, Jul. 27, 1:56 PM
- BASF (OTCQX:BASFY) and Bayer (OTCPK:BAYRY) cut the outlook for their agrochemicals businesses, which analysts say could add to the urgency for global consolidation that has swept the industry.
- Both German companies reported Q2 earnings today that were hurt by lower demand for the herbicides and pesticides made by their crop sciences divisions, as a global slump in commodities prices hurts farmers’ incomes.
- “The agriculture market has gotten more difficult and that can certainly be a trigger for market consolidation," says NordLB analyst Thorsten Strauss, adding that cheap financing conditions also play a role.
- Bayer says full-year profit for its agrochemicals division likely will decline by a low-single-digit percentage, instead of rising as it had previously projected.
- Monsanto’s (NYSE:MON) negotiating position in Bayer's takeover offer has not become stronger, according to Commerzbank's Daniel Wendorff, noting that Bayer can still argue that the weak market environment in crop science will persist.
Wed, Jul. 27, 9:10 AM
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.
Thu, Jul. 14, 3:54 AM
- BASF (OTCQX:BASFY) has declined to comment on a report Monsanto (NYSE:MON) is looking into a series of possible deals, including the potential acquisition of its agrochemicals unit.
- The news comes after Monsanto rejected a buyout offer from a different Germany company - Bayer (OTCPK:BAYRY) - back in May.
- BASF shares are in the green this morning, up 3% in Frankfurt, but the wider DAX is on the march higher too.
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.
Wed, Jun. 22, 3:35 PM
- Aspen Aerogels (ASPN +22.1%) pops 22% on news of an expanded strategic partnership with BASF (OTCQX:BASFY +0.9%), which includes a commitment to the exclusive supply of its Spaceloft A2 product for incorporation within BASF's aerogel enhanced slentex wall system.
- BASF agrees to make a low double-digit million investment toward the construction of ASPN's new manufacturing plant and provide technical support in targeting manufacturing productivity, product cost and profit margins.
- BASF says the agreement, which will run through 2027, paves the way for the two companies to develop new aerogel products and technologies.
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.
Wed, Jun. 8, 4:59 PM
- The Gazprom-led (OTCPK:OGZPY) consortium has issued the first major tender for its $11B Nord Stream-2 natural gas pipeline project, which could double supplies of Russian pipeline gas across the Baltic Sea to Western Europe, WSJ reports.
- The estimated $1B-plus tender for the pipe-laying contract has been sent to interested contractors, and bids will be evaluated by the consortium on June 13, according to the report.
- The JV building the project is 51% owned by Gazprom, while Royal Dutch Shell (RDS.A, RDS.B), E.ON (OTCQX:EONGY), OMV (OTC:OMVJF) and BASF/Wintershall (OTCQX:BASFY) each own 10% and Engie (OTCPK:ENGIY) has a 9% stake.
- The existing Nord Stream pipeline has been criticized because it allows Russia to circumvent transit countries, such as Ukraine and Poland; the European Union is skeptical about the new project on antitrust grounds because Gazprom would own all the gas to be transported through the infrastructure.
Mon, Jun. 6, 6:48 PM
- BASF (OTCQX:BASFY) said today that it would postpone a final investment decision on building a propylene plant in Freeport, Tex., because of volatile commodity prices, a possible sign that the U.S. Gulf Coast petrochemical building boom is cooling.
- "The economics just aren't as good as BASF would have hoped," says Peter Fasullo of the En*Vantage petrochemical consultancy. "I just don't think the market's there like it was when the decision was made to build 3-4 years ago."
- Nearly $50B in petrochemical projects have been announced in Texas over the last decade, with Exxon Mobil and LyondellBasell among the largest companies to announce construction plans.
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
Tue, May 17, 10:43 AM
- The Gulf Coast petrochemical boom and Chinese expansion are leading to an oversupply of the world’s two most common plastics, polyethylene and polypropylene, which will result in falling prices and profits as well as delays and cancellations of plans to build or expand petrochemical plants, according to a new report from the IHS research firm.
- Companies including Exxon Mobil (NYSE:XOM), Chevron Phillips (CVX, PSX), Dow Chemical (NYSE:DOW), BASF (OTCQX:BASFY) and LyondellBasell (NYSE:LYB) have multi-billion-dollar Gulf coast expansion projects underway, with many planned for completion in a year or so.
- Some companies already are placing planned projects on hold indefinitely; Ascend Performance materials said yesterday that it was delaying construction of a $1.2B propane dehydrogenation plant.
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?