BASF Aktiengesellschaft announced today that it has agreed to acquire the crop protection business of American Home Products Corporation (AHP) of Madison, New Jersey, for about $3.8 billion. Both companies signed a contract on March 21. 

Through this acquisition, BASF will more than double its annual crop protection sales, which were about $1.9 billion in 1999, and will move up to the top ranks of the world's leading crop protection
manufacturers. 

This purchase, which still requires approval from relevant governmental antitrust authorities, is scheduled to be completed by July 1, 2000. The BASF Supervisory Board has already approved the transaction. 

Through the combination of these activities, BASF intends to become even more competitive in crop protection due to these decisive success factors: 

• BASF will move to a leading position in major agricultural markets. BASF is expanding its presence particularly in the important agricultural markets of North and South America as well as strengthening its established position in Europe. 
• BASF will offer a strong and broad product portfolio for all attractive crops, including an established and proven line of insecticides. 
• BASF will have a combined pipeline under development containing 15 active ingredients expected to be launched by 2006 with a combined peak annual sales potential of about $2 billion. 

The combined business would have had pro forma 1999 sales of $3.6 billion and income from
operations before one-time restructuring items of $450 million. 

Annual synergy effects of $250 million 

About $250 million in annual synergy effects are expected to be generated by the transaction, with approximately half of the benefits to be achieved in the first full year after the acquisition. BASF expects the acquisition to make a positive contribution to earnings from 2001. Additional synergies are expected from various markets. 

"By combining the crop protection activities of BASF and AHP, we are further implementing our
long-term strategy in this business area, which we expect will further improve our profitability.'' said Dr. Jurgen F. Strube, Chairman of BASF's Board of Executive Directors. 

Expand core strengths 

"This acquisition further expands our traditional strengths in crop protection and we expect it will help us grow substantially through attractive products and new ideas as well as through our experienced team,'' said Eggert Voscherau, the member of BASF's Board of Executive Directors who is responsible for the company's Health & Nutrition segment. 

"We are very impressed by the professionalism of AHP's crop protection management and the
company's research pipeline.'' 

"We plan to take a leading role in the new agromarket through this acquisition and through our planned R&D investments of about $700 million in plant biotechnology during the next 10 years,'' Voscherau said. 

Crop protection with innovative power 

Crop protection is a profitable business and an area in which BASF intends to expand. 

"We have successfully introduced innovations into the market, but we have also ensured through
partnerships and acquisitions that we can provide our customers with efficient products and customized solutions to meet their needs,'' said Dr. Friedrich Vogel, president of BASF's Crop Protection division. "We will continue to make our contribution to the goal of providing the growing world population with healthy food.'' 

BASF and AHP are committed to developing innovative products in crop protection, with each
company spending about 10 percent of annual sales on research and development. "We will meet the challenges of the changing global agromarket by bundling the innovative strengths of these two companies,'' said Dr. Vogel. 

Significant BASF acquisitions in crop protection

During the last four years, BASF has made significant and successful acquisitions in crop protection, including: 

• the North American corn herbicide business of Sandoz AG of Switzerland in 1996, which made BASF one of the major players in corn herbicides; 
• a majority stake in Micro Flo, the second-largest supplier of generic products for the U.S. crop protection market, in 1998; and 
• a 40 percent stake in Svalof Weibull, a major European seed supplier based in Sweden, in 1999. 

BASF is concentrating its plant biotechnology research efforts on developing innovative second- and third-generation output traits, an area that is young and one in which BASF wants to play a leading role. The goals of this research are to create plants with improved tolerance to cold and drought as well as to improve yields of plant constituents such as vitamins and health-promoting fatty acids. 

BASF is a return-focused global company generating long-term growth and profitability from its
activities in chemicals, health and nutrition, and oil and gas. The company's product range includes high-value chemicals, plastics, dyestuffs, dispersions, automobile and industrial coatings, crop protection products, pharmaceuticals, fine chemicals, crude oil and natural gas. BASF's approach to integration, known in German as "Verbund,'' is one of the company's particular strengths and provides a unique competitive advantage. With sales in 1999 of about $29.5 billion and a workforce of 105,000 employees, BASF is one of the world's top chemical companies. 

Company news release
N2596