Material Investments and Portfolio Measures

In addition to innovations, investments make a decisive contribution toward achieving our ambitious growth goals. We use targeted acquisitions to supplement our organic growth.

By investing in our plants, we create the conditions for the profitable growth we strive for while constantly improving the efficiency of our production processes. For the period from 2021 to 2025, we have planned capital expenditures (capex)1 totaling €22.9 billion worldwide.

1 Additions to property, plant and equipment excluding acquisitions, restoration obligations, IT investments and right-of-use assets arising from leases

With a world market share of more than 40%, China is today the largest chemical market and drives the growth of global chemical production. We expect China’s share to increase to around 50% by 2030. To continue to participate in this growth in Asia in the future, we plan to build an integrated Verbund site in Zhanjiang in the southern Chinese province of Guangdong. Construction of the first plants started in 2020. We also plan to expand the site we operate together with our partner Sinopec in Nanjing, China.

In addition, we are refining our portfolio through acquisitions that promise above-average profitable growth as part of the BASF Verbund to help reach a relevant market position. A key consideration is that these are innovation-driven or offer a technological differentiation, and make new, sustainable business models possible.

Investments and acquisitions alike are prepared by interdisciplinary teams and assessed using various criteria. In this way, we ensure that economic, environmental and social concerns are included in strategic decision-making.

Investments and acquisitions 2020 (Million €)

 

Investments

Acquisitions

Total

Intangible assets

103

691

794

of which goodwill

21

21

Property, plant and equipmenta

3,516

559

4,075

Total

3,619

1,250

4,869

a

Including restoration obligations, IT investments and right-of-use assets arising from leases

Investments

Investments in property, plant and equipment amounted to €3,516 million in 2020 (2019: €3,839 million). Capex1 accounted for €2,878 million of this amount (2019: €3,349 million). Our investments in 2020 focused on the Chemicals, Materials, Surface Technologies and Nutrition & Care segments.

In Europe, construction continued for another production plant for vitamin A at the Ludwigshafen site in Germany. It is scheduled for startup in 2021. We are expanding the ethylene oxide complex in Antwerp, Belgium, and are building production plants for battery materials and their precursors in Harjavalta, Finland, and Schwarzheide, Germany.

In North America, we continued construction of an MDI synthesis unit in Geismar, Louisiana, and started up the first plants.

In Asia, we continued to drive forward construction of the new integrated Verbund site in Zhanjiang, China, in 2020. The first production facilities are scheduled for completion in 2022. We started up a plant for emissions catalysts in Shanghai, China.

Additions to property, plant and equipmenta by segment in 2020
Additions to property, plant and equipment by segment in 2020 (pie chart)

a Including restoration obligations, IT investments and right-of-use assets arising from leases

Additions to property, plant and equipmenta by region in 2020
Additions to property, plant and equipment by region in 2020 (pie chart)

a Including restoration obligations, IT investments and right-of-use assets arising from leases

Acquisitions

We added €559 million worth of property, plant and equipment through acquisitions in 2020. Additions to intangible assets including goodwill amounted to €691 million.

On January 31, 2020, BASF closed the acquisition of Solvay’s integrated polyamide business, which was agreed in September 2017. The acquisition broadens BASF’s polyamide capabilities with innovative and well-known products and enhances access to growth markets in Asia as well as in North and South America. Through the backward integration into the key raw material adiponitrile (ADN), BASF now has production plants along the entire value chain for polyamide 6.6. The transaction includes production sites in Germany, France, China, India, South Korea, Brazil and Mexico; research and development centers and technical consultation centers; and shares in Butachimie SNC and Alsachimie S.A.S. BASF acquired the polyamide business for a purchase price of €1.3 billion (on a cash and debt-free basis) and integrated it into the Performance Materials and Monomers divisions within the Materials segment.

Divestitures

On September 30, 2020,2 we closed the divestiture of our construction chemicals business to an affiliate of Lone Star, a global private equity firm, as agreed in December 2019. The purchase price on a cash and debt-free basis was €3.17 billion. The divested construction chemicals business had around 7,500 employees and operated production sites and sales offices in more than 60 countries. It generated sales of around €2.6 billion in 2019.

2 The construction chemicals business was transferred in two steps, on September 30, 2020, and on November 30, 2020.

Agreed transactions

On August 29, 2019, we reached an agreement with DIC, Tokyo, Japan, on the acquisition of BASF’s global pigments business. The purchase price on a cash and debt-free basis is €1.15 billion. The assets and liabilities to be divested were reclassified to a disposal group in the Dispersions & Pigments division as of this date. The transaction is expected to close in the first half of 2021, subject to the approval of the relevant competition authorities.