When BASF Lets "Agriculture" Fly Solo: Giant Slimming and Ambitions Under Capital Reassessment

BASF plans to spin off its Agricultural Solutions business unit on the Frankfurt Stock Exchange around 2025. This move reflects the strategic consideration of unlocking business value through capital operations and focusing on core businesses. In 2024, this agricultural business unit achieved sales of approximately 9.8 billion euros (accounting for about 15% of the group's sales), mainly covering crop protection chemicals, seeds, and digital agricultural solutions. BASF's management believes that the capital market underestimates the profitability prospects of this unit within the BASF Group. An independent listing is expected to allow the market to assess its value more fairly. By introducing external shareholders through a partial IPO, BASF will still retain controlling interest, thus gaining additional funding to support the business's growth while maintaining strategic leadership. This operation reflects the core of BASF's new strategy, "Winning Ways": streamlining operations, optimizing capital allocation, focusing on high-growth areas, and enhancing the focus on core specialty chemicals business.

Considerations of Growth and Value Release Behind Divestiture

BASF's decision to split its agricultural solutions business is driven by clear considerations of growth and value release. Firstly, in terms of growth, an independently operated agricultural business will have greater flexibility to capture opportunities in emerging markets. The management aims to grant the agricultural sector more autonomy to accelerate its expansion in high-growth regions, such as Asia, and to achieve bolder expansion in the global seed market. In recent years, the Asian market, especially China, has experienced rapid growth, and BASF has also invested in building large chemical bases in China. With the agriculture segment operating independently, it can more flexibly increase investments in these areas. Additionally, independent listing will help the agricultural business strengthen strategic collaboration with partners, such as co-developing new varieties or digital agriculture services with local companies, thereby responding more agilely to the needs of farmers in various regions.

Secondly, in terms of value release, BASF aims to achieve "latent value realization" through the spin-off. As part of a comprehensive chemical giant, the performance and growth potential of the agricultural business may be overshadowed by other divisions within the group, and its valuation may not be fully reflected. By spinning off the agricultural division for listing, investors can assess its value independently, and it is expected that the valuation of this division after listing will be significantly higher than its current implied valuation within the group, thereby releasing shareholder value. Analysts estimate that the valuation range of BASF's Agricultural Solutions division could reach 16.5 billion to 19.5 billion euros (approximately 1.7 to 2 times its annual sales), and this value is expected to be recognized by the market upon independent listing.

Thirdly, this move will help improve the efficiency of capital operations and resource allocation. After the split, the financial indicators and investment needs of the agricultural business will become more transparent and independent, allowing management to set more targeted performance goals and incentive mechanisms. BASF has previously set departments such as agriculture, battery materials, and coatings as more autonomous business units to strengthen the performance culture and profit responsibility. An independent agricultural company can flexibly adjust its R&D investment and acquisition plans according to its own strategy, making bolder investments in areas such as crop protection, biotechnology, and digital agriculture, without having to compete for internal resources with other BASF business units.

It is noteworthy that BASF will continue to adhere to the core mission of its agricultural business—serving farmers and promoting agricultural innovation. The company emphasizes that even after the spin-off, the needs of farmers will remain central to its innovation strategy. In recent years, BASF has consistently invested in hybrid seeds, pest and stress-resistant crops, and digital agricultural tools, and has supported climate-smart agricultural technology startups through its venture capital fund to ensure a leading edge in technology. Therefore, the spin-off does not mean a reduction in investment in the agricultural sector; rather, it aims to unleash its innovative vitality, bringing new technologies to market more quickly and driving sustainable growth. Analysts have pointed out that the funds raised from this partial IPO and the higher market valuation will enhance the agricultural business's ability to make targeted investments and strategic collaborations, helping BASF achieve its goal of becoming a provider of integrated sustainable agricultural solutions.

Of course, this split plan also comes with challenges. Labor organizations have expressed concerns about layoffs and facility closures. BASF needs to strike a balance between improving operational efficiency and safeguarding employee interests. However, overall, the industry generally views this restructuring as a strategic transformation for BASF towards sustainable innovation and a quicker response to market changes. By divesting to unlock value and focusing on growth areas, BASF aims to take the initiative in the global agricultural technology competition and meet future challenges with a more streamlined and efficient structure.

Structural Adjustment Trends in the Chemical Industry Giants

BASF's divestiture of its agricultural business is not an isolated case, but rather a part of the strategic restructuring wave among global chemical and agrochemical giants in recent years. Over the past decade, there have been several major mergers, acquisitions, and spin-offs within the industry, driven by considerations of optimizing business portfolios and maximizing shareholder value.

DuPont and Dow's Merger and Subsequent Split: In 2015, DuPont and Dow Chemical merged to form DowDuPont. Subsequently, in 2019, they were split into three companies based on business segments, with the agricultural business becoming the standalone Corteva, Inc. During this process, DuPont sold some of its agrochemical assets (including certain herbicide businesses) to FMC to meet antitrust requirements. Ultimately, Corteva was established as a pure agricultural company, focusing resources on deepening agricultural technology by separating seed and pesticide businesses from traditional chemicals.

Corteva to Split Business Again: More notably, in 2025, Corteva announced it would once again split its seed and pesticide business, forming two independent publicly listed companies. The Corteva board has approved this plan, with the new Corteva focusing on crop protection products, while SpinCo will concentrate on seeds (primarily the Pioneer seed brand). Corteva's management believes that the development paths of the seed and crop protection markets have diverged, and the split will help each business focus on its own strategy, increase investment in innovation, and release greater value through independent operations. This move further confirms the industry trend that "specialized operations are superior to the big and comprehensive model."

Syngenta Ownership Change and Restructuring: In 2017, China National Chemical Corporation (ChemChina) acquired Swiss company Syngenta, subsequently integrating Syngenta with the agricultural division of Sinochem Group and Israeli company Adama, forming the new Syngenta Group. The Syngenta Group has become a giant spanning crop protection, seeds, and agrochemical product distribution, and plans to list on the Shanghai STAR Market for financing. This is actually another form of restructuring: achieving scale and synergy through mergers and acquisitions, while seeking a public listing to unlock value. Although the Syngenta Group's IPO process has been delayed multiple times, the company's sales reached $33.3 billion in 2022, demonstrating the strategic success of expanding the agricultural sector through capital operations.

Bayer integrates Monsanto and is considering adjustments: In 2018, Germany's Bayer acquired America's Monsanto for $66 billion, creating one of the world's largest seed and agrochemical companies. However, the aftermath of large-scale acquisitions (such as debt and lawsuits) and fluctuations in the agrochemical market have put pressure on Bayer's stock price. Since 2023, Bayer's new CEO has also been considering options for splitting the company, publicly stating that he does not rule out the separation of the Crop Science (Agriculture) business or Consumer Health business. Although Bayer has not officially initiated the split, investors are increasingly calling for the separation of the pharmaceutical and agriculture segments to enhance their respective focus and value. This reflects the industry consensus on "splitting to unleash potential" for integrated companies.

Overall, the global agrochemical sector is undergoing a transformation from being "large and comprehensive" to "specialized." Many industry giants are choosing to divest non-core businesses or operate segmented divisions independently to enhance strategic focus and market responsiveness. Capital maneuvers such as IPOs, spin-offs, and mergers and acquisitions have become key methods driving this trend: through restructuring, companies can raise funds needed for developing emerging fields, while investors can more clearly assess the value and growth prospects of each part of the business. At the same time, changes in regulatory and market environments (such as food security pressures and sustainable development requirements) are also forcing companies to more agilely adjust their structures, focusing on their most competitive areas. BASF's recent spin-off aligns with the industry's trend toward specialization and agility, reflecting the self-transformation of the entire agrochemical industry in response to global food system challenges.

BASF Agricultural Business Compared with Major Agrochemical Companies

As an important player in the global agrochemical landscape, BASF's agricultural solutions business has a competitive yet complementary relationship with Bayer Crop Science, Syngenta Group, and Corteva in terms of product portfolio, market position, regional layout, and profitability. A horizontal comparison of these industry giants helps to understand the relative strengths and weaknesses of BASF's agricultural segment.

First, let's look at the business scale and market share. Bayer, Syngenta, and Corteva are considered the top three players in the global agricultural inputs market, with BASF following closely behind. In 2024, Bayer's Crop Science division is expected to generate sales of approximately 22.26 billion euros; Syngenta Group is projected to have sales of about 28.8 billion USD (equivalent to approximately 27 billion euros), leading in both pesticides and seeds; Corteva's sales are estimated at about 17 billion USD (approximately 16 billion euros); in comparison, BASF Agricultural Solutions is expected to generate sales of 9.798 billion euros in 2024. This indicates that BASF's agricultural business is less than half the size of Bayer and Syngenta, making it the smallest among the "big four." However, BASF remains among the top four in the global crop protection chemicals market, with a double-digit market share and a solid competitive position. The gap is even more pronounced in the seed business: Bayer and Corteva control about 17% and 13% of the global seed market, respectively, while Syngenta and BASF have single-digit shares. This reflects BASF's strong position in the traditionally advantageous field of pesticides, but relative weakness in genetically modified seeds and germplasm resources.

Secondly, there are differences in product portfolios and R&D directions. Bayer and Corteva have the most comprehensive business portfolios: Bayer possesses Monsanto's genetically modified seeds (such as insect-resistant corn and herbicide-resistant soybeans) and traditional seed businesses, as well as globally leading herbicide (such as glyphosate and dicamba), insecticide, and fungicide product lines, along with a digital agriculture platform (Climate FieldView); Corteva inherits the agricultural technology genes of Dow and DuPont, with a dual focus on seeds (corn and soybean seeds under the Pioneer brand) and agrochemicals (the Enlist herbicide system, insecticides, etc.), and has in recent years heavily invested in the fields of biopesticides and biostimulants to expand its sustainable product portfolio. Syngenta Group is characterized by integrating patented and off-patent agrochemicals: it not only has the original Syngenta company's innovative agrochemicals and seed business but also covers a vast range of non-patented agrochemical product lines through Adama, making its product portfolio the most diverse globally. Leveraging the Chinese market, Syngenta Group has also ventured into the distribution of fertilizers and agricultural chemicals, achieving a high degree of supply chain integration. BASF's agricultural product portfolio is relatively concentrated in the field of chemical agrochemicals, especially having a strong R&D and market foundation in herbicides (such as paraquat alternatives and imidazolinones) and fungicides (such as strobilurins); in terms of seeds, BASF has acquired certain businesses through acquisitions (including LibertyLink herbicide-resistant canola and soybean varieties, as well as the vegetable seed business Nunhems), but the overall scale and technological depth of its seed business still cannot compare with Bayer and Corteva. It is worth noting that all four companies are focusing on digital agriculture and biotechnology as future R&D priorities: for instance, BASF has launched the xarvio digital agriculture platform, Syngenta has developed crop models and precision spraying technology, and Bayer and Corteva continue to invest in agricultural biotechnology and gene editing. Overall, BASF maintains an advantage in chemical agrochemical innovation, but needs to catch up in emerging fields such as genetically modified seeds and biological solutions.

Looking at regional market layout and growth priorities, Bayer and Corteva dominate the Americas market: Bayer's corn and soybean seeds and herbicides have a very high market share in North America and Latin America (especially Brazil), while Corteva's Pioneer seeds have long ranked first in the North American corn market. Syngenta's business has a prominent advantage in emerging markets in Asia, particularly leveraging China's vast agricultural input market to achieve rapid growth; at the same time, Syngenta also has strong business in Europe, Central and South America. BASF traditionally has a solid business foundation in Europe and North America and is actively expanding in Latin America, such as selling fungicides and soybean insecticides in Brazil; the Asia-Pacific region (especially China, India, etc.) is considered a new growth point for BASF's agricultural business. In 2025, BASF's agricultural sector revenue in Greater China grew by 8.1%, and the company has increased its investment efforts in the Asia-Pacific, showing its emphasis on regional growth. Therefore, compared to competitors, BASF needs to focus more on expanding emerging markets to compensate for its relatively weak position in the main crop market in the Americas. Companies also face different challenges in various regions, such as the Latin American market experiencing slowed growth due to drought and exchange rate fluctuations in recent years, while the Asia-Pacific market has many competitors and the rise of local enterprises. Companies that can succeed globally will prevail in the competition.

From the perspective of profitability, the agricultural business profitability levels of Bayer, Corteva, and BASF are roughly comparable, while Syngenta Group's margin is slightly lower due to its considerable generic agrochemical business. In 2022, when the global agrochemical market was booming, Bayer Crop Science's EBITDA margin exceeded 27%; however, in 2023, due to the decline in prices of products such as glyphosate, the margin fell to about 21.7%. Corteva's EBITDA margin has remained around 20% in recent years. BASF's Agricultural Solutions division achieved a pre-special items EBITDA margin of 22.5% in 2023 and is expected to be about 19.8% in 2024. Overall, the profitability of these companies' agricultural businesses hovers around the 20% range, reflecting the high R&D, high investment, and high return characteristics of the agricultural input industry. Syngenta Group, due to its significant proportion of generic agrochemicals and operations in the Chinese market, had an EBITDA margin of about 17% in 2022, decreasing to 14-15% in 2023-2024. It is important to note that the profitability levels of different companies are greatly influenced by their product mix: companies with a higher proportion of patented seeds and agrochemicals (such as Bayer and Corteva) exhibit greater profit elasticity during boom periods, while companies with a higher share of generic products have relatively stable profits but are more affected by price declines. BASF's agricultural business, with its longstanding chemical research and development expertise, maintains a margin above the industry average, while continuously reducing costs through digitization and operational improvements to enhance its resilience to economic cycles.

The table below summarizes a comparison of BASF Agricultural Solutions with major competitors in key indicators such as scale, product portfolio, regional layout, and profitability.

Note: The exchange rate in the above table is estimated at approximately 1 Euro ≈ 1.07 USD.

From the comparison above, it can be seen that BASF's agricultural business has strong innovation capabilities and market position in the field of crop protection, but is relatively weak in seeds and traits, as well as biotechnology. Compared to comprehensive agricultural technology companies like Bayer and Corteva, BASF's current product line is relatively focused. Whether it can expand its global market share in the future partly depends on breakthroughs in seeds and new technologies. Regionally, BASF needs to consolidate its presence in the European and American markets while capturing a larger share in the rapidly growing Asian emerging agricultural markets to catch up with competitors like Syngenta, which have already established a strong presence in the region. In terms of profitability, BASF is generally on par with major competitors, demonstrating good operational efficiency and cost control. However, Bayer and Corteva's broader product portfolios also mean higher profit elasticity during agricultural boom cycles. Therefore, BASF's decision to spin off its agricultural business and focus on independent development can be seen as a strategic move to address its weaknesses and leverage its strengths. By introducing capital and enhancing independent operations, BASF's agricultural segment is expected to increase investment in seeds, biotechnology, and emerging markets, thereby enhancing its competitiveness and value creation capability in the global agricultural technology landscape.

In summary, BASF's plan to spin off its agricultural solutions business unit outlines a clear line of capital operation and industrial strategy: by achieving business independence and listing, it aims to unlock undervalued growth potential and leverage the power of capital markets to accelerate the development of its agricultural sector. This decision aligns with the trend of specialization restructuring among global chemical giants and underscores BASF's calm assessment of its own strengths and weaknesses. For BASF, a successful spin-off of its agricultural business would mean incubating a more agile and innovation-driven agricultural technology leader on the foundation of a traditional chemical giant. In the context of increasingly fierce competition in the global agricultural sector and ongoing technological transformation, BASF's move embodies a keen expectation for future growth and a firm commitment to delivering value to shareholders. This capital operation will not only reshape BASF's own business landscape but also provide a strong commentary on the next evolution of the global agrochemical industry: only by embracing change and striving for innovation can one remain invincible in the agricultural future, where opportunities and challenges coexist.