BASF, Ludwigshafen, Germany, said March 1 that it plans to sell major parts of its fertilizer business. This comprises production plants in Antwerp, Belgium, and BASF’s 50 percent share of the joint venture PEC-Rhin in Ottmarsheim, France. The activities have a total annual capacity of approximately 2.5 million mt of fertilizer and account for less than 1 percent of BASF Group’s total sales. BASF plans to complete the transaction by the first quarter of 2012.
In Antwerp, the scope includes plants for CAN/AN (calcium ammonium nitrate/ammonium nitrate) fertilizers, Nitrophoska® fertilizers, and nitrophosphoric acid, as well as three related nitric acid plants. In a first step, it is planned to carve out the activities into a 100 percent BASF subsidiary. About 330 employees will transfer to the new company, and later to the future purchaser.
BASF also plans to sell its shares in PEC-Rhin, which produces CAN/AN fertilizers and the respective intermediates, ammonia and nitric acid. The company is a 50-50 joint venture with GPN, a member of the French Total group, and currently has about 190 employees.
The plants in Ludwigshafen are not included in the carve out as they have an essential function for important value chains within the Verbund site.
“Our fertilizer activities are profitable, but do not belong to our strategic core business,” said Dr. Andreas Kreimeyer, member of the board of executive directors of BASF SE, responsible for the chemicals segment. “Our very skilled team and the highly competitive plants will have a sustainable future and will create additional value with a strategic purchaser whose core business is fertilizer.”
BASF’s fertilizer activities are mainly focused on Europe. In 2000, a distribution contract between BASF and K+S Nitrogen (formerly fertiva) for all fertilizers produced by BASF was signed.
K+S issued a statement noting that BASF produces nitrogen fertilizers for K+S on an exclusive basis at its sites in Ludwigshafen and Antwerp, in particular. It said as the intended sell-off does not include the fertilizer plants at Ludwigshafen, existing delivery arrangements between COMPO and BASF will not be affected.
K+S said the supplying of K+S Nitrogen from the Antwerp plants put up for sale by BASF will also continue without change and can be terminated by BASF or a potential buyer on Dec. 31, 2014, at the earliest.
The news led to speculation that K+S itself might be an interested buyer in the BASF assets. As a consumer of product from some of the sites this might be plausible; however, others noted that K+S has been moving toward being more of a mining company in recent years.
Yara International ASA, the largest nitrogen producer in the world and key player in Europe, was also mentioned as a possible buyer. A company spokesman said it might be ?Çô at the right price.
In the meantime, a leading Israeli chemical industry analyst predicts that Israel Chemicals Ltd. (ICL) is likely to bid for the assets. “The purchase of BASF’s European fertilizer operations could serve to balance Israel Chemicals’ business, which is heavily dominated by potash,” said Amir Adar, head of research at Migdal Financial Markets, a Tel Aviv-based investment bank. Prior to the latest acquisition, ICL Fertilizers produced 1.9 million mt a year of fertilizers. He added that such an acquisition would also fit well with ICL Fertilizers’ geographic deployment, as the BASF production facilities are in Belgium and France.
In addition, acquisition-hungry North American companies should not be counted out, as some of them have recently been making inroads into Europe and/or internationally.
BASF, which touts itself as the world’s leading chemical company, posted sales of about ?é¼63.9 billion in 2010 and had approximately 109,000 employees as of the end of the year. BASF