At its capital markets day, Markus Kamieth, BASF’s Chairman of the board of executive directors, and company leaders shared their new strategy for the company.
At its core, there are two pillars:
- A winning culture with incentive for a performance mindset
- Value creation, for the shareholders in particular
“We have not met shareholder expectations nor our own expectations,” Kamieth said. “We believe the chemical industry will stay attractive and continue to be an essential industry.”
As an example for why change strategy now, he shared, “the green transformation is changing the setup of value chains. And that’s why BASF needs to and will change.”
Driving the change within the company are three activities: portfolio steering, capital allocation, and performance culture.
With many changes coming as early as January 2025, structurally, the company will realign under two umbrellas: core businesses (chemicals, materials, industrial solutions, nutrition and care) and standalone businesses (surface technologies and agricultural solutions.)
As a standalone business, the agricultural solutions division had 2023 sales more than $11.3 billion globally.
Kamieth says the new structure will give the portfolio clarity on how to strategically allocate capital and steer focus.
“This is not about getting rid of something. This is not about generating cash. This is purely about value,” he says. “We are open for strategic options. But we will keep our clean view on creating value.”
He adds the new structure will enable more operational and strategic flexibility for the businesses.
Specific to the standalone business units (including agriculture), Kamieth notes they are analyzed differently than their peers.
“We are competing with pure play companies in their markets. And our businesses are successful and competitive and well invested. These are top performing and leading businesses in the market. Compared to the value the peers are being valued at in capital markets, they are undervalued at BASF. They can command a premium value,” Kamieth said.
So what does this mean for the ag division? He says they have already startied the process of separating the ERP business for ag. And they are getting “IPO ready” to prepare for potential listing. And one potential is a listing of minority share.
“Our agricultural solutions business has been developing into for many years now already into a very different direction,” Kamieth said. You’re talking about an integrated business model between seeds, traits, digital solutions and the chemistry that originally was the, founding business for BASF. It is becoming a systems business that has less and less to do with what actually a chemical company is considering at its core.”
BASF also provided this statement: “With the announcement, there will be no changes in steering our business with our customers. There will also be no immediate changes to our business, products, and services. Our customers continue to stay at the center of everything we do. We will continue to invest in our innovation pipeline to launch blockbusters in all business segments, continue to deliver our crop systems strategy and connected offers to be a business model innovator and we will steer our business in a balanced way to deliver sustainable and profitable growth.
Targeting a partial IPO is one promising option to capitalize on the deep industry expertise and leverage the market position of BASF as a leading ag innovation player to get access to agriculture-specific investors bringing untapped capital to pursue growth opportunities for BASF Agricultural Solutions.”
BASF has been growing its agricultural portfolio, perhaps most notably with its acqusition of seed assets from Bayer.
Regarding future merger and acquisition activity in the ag business, Michael Heinz, member of the board of executive directors says it’s something BASF will consider.
“There are still, every now and then, some opportunities for small to medium sized seed companies or maybe a biological company that would become available. That is certainly something that we would continue to take a look at,” he said.
