BASF Officially Enters Seed Business With Purchase Of Bayer's Seed Division

In its largest purchase to date, agrochemical giant BASF has announced it is purchasing Bayer Crop Science’s line of Liberty herbicides as well as the entire seed division in a deal worth $7 billion dollars.  This will be the first time that BASF, who previously had scoffed at the cost of development of GM traits, has entered the competitive seed business.  It may not be the last time either.  In a call with investors, BASF’s CEO Kurt Bock said that other deals may follow as BASF expands its expertise.  Reports are that BASF finished the deal after outbidding Syngenta and their new partner China National Chemical  Corp.
As for value, analysts have said that BASF’s purchase price of 15 times EBITDA is lower than that paid for other deals as of late.  BASF said the deal be included on its earnings per share as of the first quarter.  They expect the deal to be finalized sometime in the first quarter.
For its part, the deal with BASF allows Bayer some significant breathing room as they meet with regulators regarding their merger with seed giant Monsanto.  EU regulators had expressed some major concerns and recently put approval on hold pending a study on how that deal would affect competition and the pacts farmers.  There has been no word from regulators directly on what portion of Bayer and Monsanto might be causing hold ups, but industry discussion for some time has shown concern about the percentage of seed products the combined company would own, especially in Canola and Cotton.  The deal will also likely provide some cash to Bayer ahead of the Monsanto closing.
In mid morning trade, BASF stocks were down $0.29 while Bayer AG was up $1.30.