* BASF looked into acquiring FMC Corp last year - sources
* Focus for now on antitrust-related selloffs - sources
* Off-patent crop protection still on BASF radar - sources
By Patricia Weiss and Ludwig Burger
FRANKFURT, March 22 With rivals joining forces
all around, Germany's BASF has been eyeing a surprise
foray into generic pesticides, although the issue is on hold
while it looks to snap up assets being spun off in those
With an internal debate raging about how to react to the
mega-mergers, the world's third-largest crop chemicals supplier
last year looked into acquiring U.S. pesticides peer FMC Corp
, according to three people familiar with the
While considerations did reach a concrete stage, BASF for
now feels such a move would needlessly complicate its
examination of several billions in assets put on the block by
rivals to allay antitrust concerns. But the strategic rationale
is intact and can be revisited, the sources told Reuters.
BASF is the only player left among the top six in a global
seeds and pesticides market worth over $100 billion that has not
paired up with a major peer. Like most of its large rivals in
crop protection, it has mostly focused on developing new patent-
protected compounds to command premium prices.
One reason to branch out into cheaper pesticides that have
lost patent protection would be faster access to emerging
markets such as Africa and China, where most farmers cannot
afford the latest generation of Western crop chemicals, the
"In some of these markets, the prices of patent-protected
products are beyond what's affordable by a factor of 10," said
Companies such as FMC primarily use off-patent active
ingredients or acquire the rights to novel substances from
others. They focus development efforts on improving the
application of a given compound in the field, or identifying new
crops or geographic regions that can benefit.
This could, for instance, mean preventing spray from
evaporating or drifting away with the wind to harm wildlife or
neighbouring fields; it can take the form of making sure
droplets stick to the target leaves and are absorbed or released
at the optimum rate.
MARKET INSIGHT AND ACCESS
FMC declined to comment. A BASF spokeswoman said in a
written statement that the group - which is also active in areas
such as oil and gas, industrial petrochemicals, engineering
plastics and vitamins - was constantly looking into possible
takeovers and divestments.
Meanwhile, Bayer and Monsanto, Dow
and DuPont, and ChemChina and Syngenta
are all seeking regulatory approval for mergers.
The sources said that FMC's market insight could help BASF
compete better as the industry rushes to bypass wholesale trade
and sell direct to growers with the help of digital tools.
FMC's sales to farmers - expected to be around $2.2-2.4
billion this year - would help BASF to spread the costs of new
direct-marketing channels across a wider revenue base.
Even though BASF Chief Executive Kurt Bock has said "big and
fancy" deals do not always create value, discussions are in full
swing at the 152-year-old company about how to cope with the
emergence of much larger rivals in agriculture, the sources
With a considerable premium required on top of FMC's stock
market value of about $8 billion, the mooted transaction would
be the largest in BASF's history.
A foray into generic chemicals would offer investors an
alternative strategic vision from that of its major rivals,
which seek to link up seed and crop protection offerings.
BASF has taken the view that the benefits do not justify the
tens of billions going into the mega-mergers. So far, it has
avoided seed assets and instead pursued research into plant
characteristics such as drought tolerance, which it sells or
licenses out to seed breeders. But investors are still keen for
"It is good to have somebody at the helm who doesn't feel
pressured to follow just any trend. But if everyone around BASF
is consolidating, there is a risk that, over the long term, the
question will be: Why didn't it join in?" said one fund manager
holding shares in BASF, who asked not to be named.
NEW USES FOR OLD CHEMICALS
Other players in the off-patent industry are ChemChina's
Adama, with about $3.1 billion in sales; and Platform Specialty
Products Corp's Agricultural Solutions unit with about
$1.8 billion in sales, made up mainly of Arysta LifeScience
FMC in 2014 boosted its off-patent crop chemicals operations
with the $1.8 billion acquisition of Denmark's Cheminova, paying
about 13 times core earnings. But the sub-sector has received
little attention during last year's unprecedented slew of major
Still, growing consumer concerns about toxicity have
prompted environmental regulators around the globe gradually to
raise the bar for approving new crop protection substances.
This has encouraged the industry to find new uses for
decades-old substances. The discovery of a genetic tweak that
makes field crops survive the generic weed killer dicamba, for
instance, has prompted the industry to develop more
environmentally friendly dicamba versions that evaporate less
BASF's executive directors have for their part pointed to
the opportunities to snap up assets being sold off in the course
of the mega-mergers.
Sources familiar with the process say BASF is primarily
eyeing herbicides and insecticides businesses from Dow and
DuPont's planned $130 billion merger and three-way split, but
also seeds and herbicides businesses expected to be sold by
Bayer as part of its $66 billion takeover of Monsanto.
CEO Bock said a month ago that, even though the crop
protection unit was performing very well, he would like it to be
Excluding expected asset sales, the Monsanto-Bayer deal will
create an undisputed market leader with 27 percent of global
seeds and pesticides business.
Even the 17 percent accounted for by Dow and DuPont, before
asset sales, would dwarf BASF's 7 percent share.
FMC derives about two-thirds of its sales from crop
protection, with food and drug ingredients and lithium chemicals
accounting for the rest.
BASF's spokeswoman said that its acquisition strategy
focused on businesses that meet criteria such as innovative
strength, above-average growth, a focus on attractive regions
such as emerging markets, and shielding the portfolio against
(Additional reporting by Arno Schuetze; Editing by Kevin