We create chemistry for a sustainable future · Global annual growth rate of ~3.6%* …more food...

We create chemistry for a sustainable future

Martin LiedemitDeputy Head of

Investor Relations

Roadshow

Edinburgh

November 23 & 24,

2017

BASF Capital Market Story, November 2017 2

Cautionary note regarding

forward-looking statements

This presentation contains forward-looking statements. These forward-looking statements are based

on current estimates and projections of the Board of Executive Directors and on currently available

information. These forward-looking statements are not guarantees of the future developments and

results outlined therein. Rather, they depend on a number of factors, involve various risks and

uncertainties, and are based on assumptions that may not prove to be accurate. Such risk factors

particularly include those discussed on pages 111 to 118 of the BASF Report 2016. The BASF

Report is available online at basf.com/report. BASF does not assume any obligation to update the

forward-looking statements contained in this presentation.


Agenda

At a glance1

Strategic levers2

Segments3


▪ Growth above chemical industry average – driven by innovative and sustainable products

and solutions

▪ Unique Verbund concept – competitive advantage based on integrated sites, operational

excellence and best-in-class technologies

▪ Broad and resilient portfolio – with global market access and strong customer relationships

▪ Earnings growth and strong cash flow generation – based on operational and financial

strength

▪ Long-term value creation with progressive dividend policy – grow or at least maintain

dividend at the previous year’s level

BASF shares – an attractive investment


Chemicals – a growth industryGlobal annual growth rate of ~3.6%*

…more food needed

by 2050

…more primary energy

consumption by 2050

…of the world population

will live in cities by 2050

Agriculture Health & Nutrition

Energy & Resources

TransportationConstruction &Housing

Consumer Goods

…people by 2050

Electrical & Electronics

Chemistry as enabler to meet current and future needs

70% 50%~10 bn 30%

* Forecast average annual real change 2017 – 2019; BASF Report 2016, p. 121


Broad and resilient portfolio2016: Sales of €57.6 billion; EBITDA of €10.5 billion

Percentage of sales 2016*

* Not depicted here: ‘Other’ 3% of Group sales and EBITDA €(1.0) billion


Global market access through regional presence

Kuantan

Hong Kong

Nanjing

Freeport

Florham Park

Geismar

Ludwigshafen

Antwerp

São Paulo

Regional centersSelected sites

Verbund sites

Selected research

and development sites

Asia Pacific

Europe

South America, Africa, Middle East

North America

Sales €14,042 million

EBIT €1,113 million

Employees 17,583



Employees 70,784



Employees 18,156


EBIT €432 million

Employees 7,307

2016: Sales by location of customer; EBIT by location of company


Verbund – unique competitive advantageActively managed in line with market requirements

▪ Annual cost savings of more than €1 billion through integrated production

▪ Verbund concept supports sustainability, reduces waste and avoids CO2 emissions of 6 million tons p.a.

Energy savings

>€300 million p.a.

People, Customers, Technology, Production


BASF Group Q3 2017Considerably higher sales and earnings

Financial figures Q3 2017 Q3 2016 Change

Sales €15.3 billion €14.0 billion 9%

EBITDA before special items €2.8 billion €2.5 billion 12%

EBITDA €3.0 billion €2.4 billion 23%

EBIT before special items €1.8 billion €1.5 billion 16%

EBIT €2.0 billion €1.5 billion 34%

Net income €1.3 billion €0.9 billion 50%

Reported EPS €1.45 €0.97 49%

Adjusted EPS €1.40 €1.10 27%

Operating cash flow €3.8 billion €2.5 billion 52%

Sales development Volumes Prices Portfolio Currencies

Q3 2017 vs. Q3 2016 4% 7% 1% (3%)


Stepwise increase of earnings level

EBIT and EBITDA*

billion €, 2001–2016

3.7

4.7 4.6

7.0 7.28.4

8.9

7.7

6.5

9.9

11.2

10.010.4

11.0 10.6 10.59.7

0

2

4

6

8

10

12

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1-Q32017

EBIT EBITDA

0.7

2.2 2.2

4.5 4.85.5

6.0

4.6

2.8

6.7

8.0

6.7 7.27.6

6.2 6.36.6

CAGREBITDA

7%CAGREBIT

16%

* 2010, 2011 indicative, adjusted for IFRS 10 & 11; 2001–2009 as reported, without non-compensable foreign income taxes on oil production

Avg. EBITDA level in depicted years

9.7


billion €, 2001–2016

2.3 2.3

4.9 4.65.3

5.9 5.8

5.0

5.7

6.5

7.16.6

8.1

7.0

9.4

7.7 7.6

0

1

2

3

4

5

6

7

8

9

10

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1-Q32017

Free cash flowOperating cash flow

-0.5 -0.1

2.8 2.63.3 3.5

3.22.5

3.2

3.9 3.7

2.63.2

1.7

3.6 3.6

5.0

6.3%

Strong cash flow development


Attractive dividendWe want to grow or at least maintain dividend at the previous year’s level

* Dividend yield based on share price at year-end

Dividend per share

€

0.65 0.70 0.700.85

1.00

1.50

1.95 1.95

1.70

2.20

2.502.60

2.702.80

2.90

0

1

2

3

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Yield* 3.1% 3.9% 3.1% 3.2% 3.1% 4.1% 3.8% 7.0% 3.9% 3.7% 4.6% 3.7% 3.5% 4.0% 4.1% 3.4%

3.00


Delivering consistent, long-term valueCurrent market capitalization: €86 billion*

Average annual performance

(with dividends reinvested)

0 2 4 6 8 10 12 14

Euro Stoxx 50

DAX 30

MSCI World

Chemicals

+5.1%

BASF

+6.9%

+1.1%

+11.2%

Last 10 years

November 2007 – October 2017

0 2 4 6 8 10 12 14

Last 3 years

November 2014 – October 2017

+14.0%

+8.5%

+12.3%

+12.2%

* As of October 31, 2017


▪ Sales growth – slightly faster than global chemical production

▪ Deliver attractive returns – earn a significant premium on cost of capital

▪ EBITDA growth – well above global chemical production

▪ Remain a strong cash provider – continuously generate high levels of free cash flow

▪ Progressive dividend policy – grow or at least maintain dividend at previous year’s level

Financial targets for the coming years


▪ Innovations for a sustainable future

▪ Investments in organic growth

▪ M&A opportunities and portfolio pruning measures

Our priorities

▪ Operational excellence and cost discipline

We aim to grow sales and earnings faster than global chemical production

in the coming years, driven by


Outlook 2017 for BASF Group

Assumptions 2017 Now Previous

GDP growth +2.8% +2.5%

Growth in industrial production +3.1% +2.5%

Growth in chemical production* +3.4% +3.4%

Exchange rate US$1.10 per euro US$1.10 per euro

Oil price (Brent) US$50 per barrel US$50 per barrel

* Excluding pharma

Outlook 2017 Now Previous

Sales Considerable increase Considerable increase

EBIT before special items and EBIT Considerable increase Considerable increase

EBIT after cost of capital Considerable increase Slight increase


Agenda

At a glance1

Strategic levers2

Segments3

► Portfolio development

► Investments

► Innovation

► Sustainability

► Operational excellence


Continuous global portfolio development

target(in % of sales*)~50% ~50%

Maintaining a balanced portfolio

Divestment of

businesses,

e.g., due to loss

of differentiation

Divestment of

businesses,

e.g., due to lower

market attractiveness

Commoditization leads to

restructuring

Growth fields

Innovation

pipeline

Acquisitions

Specialties and solutions Differentiated commodities

▪ Attractive markets

▪ Differentiation by process

technologies and integration

▪ Attractive markets

▪ Differentiation by customer

proximity and innovations

* Excluding Oil & Gas sales


Portfolio development towards more market-driven and

innovative businesses

Strong Partnerships

▪ Gazprom

▪ PETRONAS

▪ Sinopec

▪ Total

Selected transactions

2010−today

BASF

core business

~€5.5 billion sales

in emerging and

innovation-driven businesses

Acquisitions

▪ Functional crop care

▪ Personal care & food

▪ Omega-3 fatty acids

▪ Enzymes

▪ Battery materials

▪ Specialty plastics

▪ Selected assets in Oil & Gas

▪ Refinish coatings

▪ Surface treatment

Divestitures

~€21.0 billion sales

in businesses with limited fit

and differentiation potential

▪ Styrenics

▪ Fertilizers

▪ Selected assets in Oil & Gas

▪ Natural gas trading & storage

▪ Custom synthesis business

▪ Textile chemicals

▪ Polyolefin catalysts

▪ Industrial coatings

▪ Leather chemicals


Clear acquisition criteria

We want to acquire businesses which …

▪ provide a return on investment above

the WACC

▪ are EPS accretive by year three at the

latest


▪ generate profitable growth above the industry

average

▪ are innovation-driven

▪ offer a special value proposition to customers

▪ reduce earnings cyclicality

Acquisition

criteria

Strategic acquisition criteria Financial acquisition criteria


Complementary acquisitions to strengthen the portfolio

of BASF Group

Solvayʼs integrated global

polyamide business

▪ Purchase price: ~€1.6 billion

▪ Sales 2016: ~€1.3 billion

▪ EBITDA 2016: ~€200 million

▪ Market CAGR: >3.5%

▪ Closing expected in Q3 2018

Significant parts of Bayerʼs seed and

non-selective herbicide businesses

▪ Purchase price: ~€5.9 billion

▪ Sales 2016: ~€1.3 billion

▪ EBITDA 2016: ~€385 million

▪ Sales CAGR: ~15% (2014–2016)

▪ Closing expected in Q1 2018

Chemetall

Surface treatment business

▪ Purchase price: ~US$3.1 billion

▪ Sales 2015: ~US$845 million

▪ EBITDA 2015: ~US$200 million

▪ Sales CAGR: ~7% (2007–2015)

▪ Closed in December 2016


BASF signed agreement to acquire significant parts of

Bayer’s seed and non-selective herbicide businesses

Fully enabled seed and trait businesses

▪ Attractive and sizeable seed portfolio for canola/oilseed

rape, soybean and cotton in the Americas and Europe

▪ Excellent trait research for canola, soybean and cotton

▪ LibertyLink® technology for herbicide tolerance and

related trademarks

Complementary crop protection business

▪ Global glufosinate-ammonium-based non-selective herbicide

business

▪ State-of-the-art production facilities in the U.S., Canada

and Germany


BASF to acquire Solvay’s global polyamide business

* Application examples

Broader global scope

▪ Enhanced presence, especially in Asia and South America

▪ Stronger capabilities to serve global and regional

customers

Wider range of engineering plastics

▪ Technyl®, Ultramid®, Ultradur®, Ultraform®, Ultracom®

Broadening technical skills and innovation capabilities*

▪ Heat-resistant and high-voltage electrical and electronic parts

▪ Tailor-made solutions for components in automotive

▪ Mechanically strong and thermally stable consumer goods

Improved reliability of supply

▪ Backward integration into all key raw materials for polyamide 6.6

▪ Fully integrated engineering plastics value chain


Investments in organic growthInvestments of ~€3.9 billion planned for 2017

Performance

Products

21%

Oil & Gas

23% €19.0 billion

Capex budget 2017–2021

by segment

Other

13%

Chemicals

24%

Capex budget 2017–2021

by region

Asia Pacific

16%

North America

22%

Agricultural

Solutions

4%

Other**

3%

Functional Materials

& Solutions

15%

€19.0 billion

South America*

10%

* Including Africa and Middle East, ** Alternative sites currently being investigated

Europe

49%

Oil & Gas Europe


Investment projects with startup in 2017

Aroma ingredients complex

Kuantan, Malaysia

▪ BASF and PETRONAS further

expand joint activities in Malaysia

▪ Investment: around €500 million

Ammonia plant

Freeport, Texas

▪ BASF and Yara are building world-

scale ammonia plant in the U.S.

▪ 750,000 tons per year;

hydrogen-based process

Engineering plastics

Schwarzheide, Germany

▪ Expansion of annual capacity

by 70,000 tons

▪ Increasing BASFʼs global compounding

capacity to more than 700,000 tons


Oil & Gas

2%

Innovation will drive future growth

Agricultural

Solutions

26%

Chemicals

10%

Performance Products

20%

Corporate Research

21%

Key facts

€1.86 billion R&D expenditures in 2016

R&D expense to sales ratio ~3%

~10,000 employees in R&D

~3,000 projects

~850 new patents in 2016

Research Verbund:

Cooperations with more than 600

excellent partners from universities,

startups and industry

In 2016, sales of >€10 billion from

innovations on the market since 2011

R&D expenditures 2016

€1.86 billion

Functional Materials

& Solutions

21%


Polymer Technologies

Biotechnology

Production Processes

Materials

Catalysis

Biodegradable & BiobasedMaterials

Enabling Methods

Corporate Research: BASF’s key technology capabilities

are bundled in seven focus areas

Selected key technology capabilities reflect where BASF requires continued effort and

resources to safeguard today’s and tomorrow’s excellence in innovation.


Sustainable Solution Steering®

Novel methodology to screen and steer our portfolio

4.2% 0.3%

▪ >60,000 product applications analyzed

▪ 27.2% Accelerators

– Strong growth in their markets

– deliver margins above the average

– represent majority of BASF’s R&D

pipeline

▪ 68.3% Performers

▪ <1% Challenged products

Increase the share of Accelerators from 23% in 2014 to 28% by 2020

27.2%

68.3%

Substantial sustainability

contribution in the value chain

Meets basic sustainability

standards on the market

Specific sustainability issues

which are being actively addressed

Significant sustainability concern,

action plan developed

Sustainable

Solution

Steering

Percentage of

sales 2016


Innovations for a sustainable futureExamples with significant contributions to sustainability

FWC™ Four-Way Conversion

catalyst removes particulates

Acronal® MB – from biomass to

dispersions

Trilon M® phosphate alternative

for dishwashing detergentsSLENTITE® high-performance

insulation material

Green Sense® resource-efficient

concrete production

ecovio® biodegradable polymer

solution


Carbon efficiencyResponsible use of raw materials by the chemical industry

▪ BASF uses raw materials responsibly: ~80% of carbon

converted to products, ~20% needed for processes*

▪ Continuous efficiency improvements

▪ 22 million tons CO2 emissions by BASF in 2016 compared to

10–30 million tons p.a. for one coal-fired power plant

▪ Chemical industry: only ~10% of global consumption of fossil resources**

▪ Growing world population needs access to energy, housing,

healthcare and food

▪ Consumption of resources has to be reduced in order to limit global

warming to <2°C

▪ Chemistry as enabler for low-carbon technologies

(e.g., lightweight parts, battery materials, insulation, etc.) 20%

CO280%

products

* BASF carbon mass balance calculation (2016, non-audited); **IEA 2015


0

0,.001

Earnings contribution 2016 2017–2018 Total

Operational excellenceDrivE with ~€1 billion targeted earnings contribution

DrivE program

▪ Targeted annual earnings contribution of

€1 billion from end of 2018 on

▪ Optimization of processes and structures

in all regions, including

– manufacturing

– incremental capacities

– productivity increase

▪ Project timeline: 2016–2018

€350 million

€650 million

Goal €1 billion

Annual earnings contribution DrivE

million €

1,000


Strong track record in operational excellence

* Excl. companies with major IFRS 10/11 restatements, i.e. BASF YPC Nanjing, Libya onshore, other Oil & Gas and Catalysts companies

50

100

150

200

250

300

350

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

EBITDA

Sales

Fixed Costs

CAGREBITDA

8%

CAGRSales

4%

3%

CAGRFixed Costs

BASF Group* 2001–2016

indexed; CAGR 2001–2016


Digitalization will support BASF’s growth and efficiency

Digital Business Models

Smart Innovation

Smart Supply Chain

Smart Manu-facturing

Growth

▪ Digital business models

▪ Customer connectivity

▪ Digitalization in R&D

New revenue streams

Increased supply share

Higher innovation output

▪ Predictive maintenance

▪ Augmented reality in production

▪ Smart supply chain

Increased capacity

Increased work efficiency

Reduced working capital

Efficiency


Agenda

At a glance1

Strategic levers2

Segments3► Chemicals

► Performance Products

► Functional Materials & Solutions

► Agricultural Solutions

► Oil & Gas


Intermediates

728

+10%

Monomers

1,770

+41%

Petrochemicals

1,525

+16%

€4,023

+25%

Sales Q3 2017 vs. Q3 2016*

million €

EBIT before special items*

million €

488

629

958

1,120 1,102

0

400

800

1,200

Q3 Q4 Q1 Q2 Q3


Q3 2017 vs. Q3 2016 6% 22% 0% (3%)

2017

* Effective January 1, 2017, the Monomers and Dispersions & Pigments divisions’ activities for the electronics industry were combined into the global Electronic Materials business unit

and allocated to the Dispersions & Pigments division in the Performance Products segment. The 2016 figures have been adjusted accordingly.

2016

ChemicalsHigher earnings driven by increased margins and higher volumes


Performance ProductsEBIT before special items declined, EBIT increased due to special income

from transfer of leather chemicals business

Performance Chemicals

980

+4%

Nutrition & Health

451

(11%)

Care Chemicals

1,213

+3%

€3,983

+2%

EBIT before special items*

million €

Sales Q3 2017 vs. Q3 2016*

million €

Dispersions & Pigments

1,339

+3%


Q3 2017 vs. Q3 2016 6% 0% (1%) (3%)

473

237

515

405 385

0

200

400

600

800

Q3 Q4 Q1 Q2 Q3

20172016

* Effective January 1, 2017, the Monomers and Dispersions & Pigments divisions’ activities for the electronics industry were combined into the global Electronic Materials business unit

and allocated to the Dispersions & Pigments division in the Performance Products segment. The 2016 figures have been adjusted accordingly.


Functional Materials & Solutions Sales increased on good demand from automotive and construction, earnings declined

Coatings

951

+20%

Catalysts

1,506

(3%)

Construction

Chemicals

618

+2%

Performance Materials

1,900

+11%

€4,975

+7%

497458

531

422 397

0

200

400

600

800

Q3 Q4 Q1 Q2 Q3

EBIT before special items

million €

Sales Q3 2017 vs. Q3 2016

million €


Q3 2017 vs. Q3 2016 0% 6% 4% (3%)

20172016


Agricultural SolutionsEarnings decreased, primarily due to the difficult market situation in Brazil

1,049 987

0

1,000

2,000

Q3 2016 Q3 2017

Sales Q3 2017 vs. Q3 2016

million €


Q3 2017 vs. Q3 2016 5% (8%) 0% (3%)

EBIT before special items

million €

97

21

0

100

200

300

Q3 2016 Q3 2017

(6%)

(78%)


Oil & GasHigher oil and gas prices and volumes, EBIT before special items lower due to one-time

earnings effects in the prior-year quarter

Sales Q3 2017 vs. Q3 2016

million €

194180

33

139

0

100

200

300

Q3 2016 Q3 2017

Sales development Volumes Prices/Currencies Portfolio

Q3 2017 vs. Q3 2016 9% 11% 0%

EBIT before special items Net income

618

739

0

500

1,000

Q3 2016 Q3 2017

EBIT before special items, net income

million €

+20%


Review of “Other”

million € Q3 2017 Q3 2016

Sales 548 538

EBIT before special items (325) (233)

Thereof Costs of corporate research (93) (77)

Costs of corporate headquarters (57) (54)

Foreign currency results, hedging and other measurement effects (116) (101)

Other businesses 13 15

Special items (5) (23)

EBIT (330) (256)


Cash flow development Q1 – Q3 2017

million € Q1 – Q3 2017 Q1 – Q3 2016

Cash provided by operating activities 7,597 5,840

Thereof Changes in net working capital 94 (393)

Miscellaneous items (190) (172)

Cash used in investing activities (3,413) (2,776)

Thereof Payments made for tangible / intangible assets (2,606) (2,915)

Acquisitions / divestitures (44) 212

Cash used in financing activities (1,546) (1,898)

Thereof Changes in financial liabilities 1,276 837

Dividends (2,841) (2,753)

Free cash flow 4,991 2,925


Balance sheet remains strong

▪ Total assets decreased slightly to

€76.0 billion

▪ Provisions for pension obligations

decreased by €1.4 billion to €6.8 billion

▪ Net debt at €12.3 billion

(December 31, 2016: €14.4 billion)

▪ Equity ratio at 43.9%

(December 31, 2016: 42.6%)

Balance sheet September 30, 2017 vs. December 31, 2016

billion €

Liquid funds*

Accountsreceivable

Long-termassets

Inventories

Other assets

Otherliabilities

Financialdebt

Equity

27.6 26.5

16.3 16.2

32.6 33.3

Dec 31, 2016 Sep 30, 2017

1.9 3.93.03.9

11.010.6

10.010.0

50.6 47.6

Dec 31, 2016 Sep 30, 2017

76.5 76.0

* Including marketable securities

76.5 76.0

BASF to acquire Solvay’s global

polyamide businessComplementing and strengthening BASF’s

Performance Materials and Monomers portfolio

44

BASF to acquire Solvay’s global polyamide business

– transaction highlights

Purchase price of €1.6 billion (cash- and debt-free), all-cash offer

Synergies are expected based on efficiency gains and top-line growth of complementary portfolios.

EPS accretive in the first full fiscal year

Closing is expected in Q3 2018, after customary regulatory approvals have been obtained and the formal consent of

a joint venture partner has been received.

EBITDA multiple based on last twelve months from July 2016 till June 2017 (excluding synergies): ~7x

▪ According to applicable laws, the intended transaction is subject to consultations with the relevant social bodies of Solvay,

following which both companies will enter a binding purchase agreement.

45

Solvay’s polyamide business

– a leading global player in engineering plastics

Figures 2016Facts

Sales to 3rd parties €1,315 million

thereof Polymers &

Intermediates~55%

thereof Engineering

Plastics~45%

Sales by region

~50% Europe

~40% Asia and rest of the world

~10% South and North America

Recurring EBITDA* ~€200 million

Key customer industriesTransportation, construction, industrial applications,

consumer industries

Employees ~2,400

Sites12 production sites in all regions,

4 R&D sites, 10 technical support centers

Global #3 market position in polyamide-based

engineering plastics

Strong reputation of Technyl® brand with customers

State-of-the-art engineering plastics production set-up

Strong capabilities in digitally enabled services and

polymer innovation

Fully backward integrated polyamide 6.6 player

*EBITDA July 2016 – June 2017: ~€230 million

46

The polyamide value chain is an enabler for several key

industries and grows above GDP

▪ The global polyamide market grows above GDP

at ~3.5% p.a.

▪ Key applications:

- Automotive parts

- Industrial goods & electrical equipment

- Consumer products

- Construction

▪ Polyamides with good demand in electric vehicles:

- light-weight crash elements for batteries

- housings of high-voltage batteries

- connectors

- charging couplers

47

Broadening technical skills

and innovation capabilities*

Heat-resistant &

high-voltage

electrical and

electronic parts

Tailor-made

solutions for

components in

automotive

Mechanically

strong & thermally

stable consumer

goods

BASF’s and Solvay’s combined polyamide businesses

– providing even better solutions for customers

▪ Technyl®

▪ Ultramid®

▪ Ultradur®

▪ Ultraform®

▪ Ultracom®

Wider range of


Improved reliability

of supply

Broader

global scope

▪ Backward integration

into all key raw

materials for poly-

amide 6.6 production

▪ Fully integrated


value chain

▪ Enhanced presence,

especially in Asia and

South America

▪ Stronger capabilities

to serve global and

regional customers

* Application examples

48

BASF’s and Solvay’s combined polyamide businesses

– a fully integrated and more reliable supplier

Buta-

diene

ADN** HMD

Adipic

acid

PA6.6

base

polymer

AH-saltEngineering

plastics

Solvay’s polyamide business

KA-oil

ADN

purchase

Adipic

acid

HMD

PA6.6

base

polymer

AH-saltEngineering

plastics

BASF

KA-oil

ADN: adipodinitrile, HMD: hexamethylenediamine, KA-oil: mixture of cyclohexanone and cyclohexanol, AH-salt: hexamethylenediamine adipate

* Size of squares does not represent size of plants or capacities; ** Joint Venture Butachimie in France

Today* Future*

ADN** HMD

Adipic

acid

PA6.6

base

polymer

AH-saltEngineering

plastics

KA-oil

Buta-

diene

49

Solvay’s global polyamide business

– an excellent strategic fit for BASF

Customer focus▪ Complementary customer base (e.g., OEMs in southern Europe, Korea, China, Brazil)

▪ Well-positioned in transportation industry and industrial applications

Access to key

growth markets▪ Expanding position in Asia and South America

Innovation-driven ▪ Strong innovation pipeline (e.g., 3D printing, prototyping, recycling)

Strong and

robust financials▪ Attractive business with resilient earnings profile

High supply

reliability▪ Integrated value chain with backward integration into key raw materials for engineering plastics

Synergy

potential

▪ Cost synergies through operational excellence, procurement and streamlining of value chains

▪ Top-line synergies through complementary customer portfolios and cross-selling opportunities

BASF signs agreement to acquire significant parts of Bayer’s seed and non-selective herbicide businesses

October 13, 2017

BASF signs agreement to acquire significant parts of Bayer’s seed and non-selective herbicide businessesTransaction highlights

Excellent opportunity to acquire high-quality and fully-enabled seed businesses for canola/oilseed

rape, soybean and cotton as well as a global non-selective herbicide business

All-cash purchase price* of €5.9 billion; EBITDA multiple* of ~15x (asset deal)

▪ Transaction will expand BASF’s agricultural solutions offering and leverage its crop protection

expertise to cater to a broader range of farmers’ needs

Significant top-line growth potential identified based on complementary portfolios

Financing through a combination of cash on hand, commercial papers and bonds

Closing expected in Q1 2018, subject to the closing of the Bayer/Monsanto transaction and

relevant regulatory approvals

Cash EPS accretive in the first full fiscal year, EPS accretive by 2020

52* The purchase price excludes the value of net working capital and will be subject to certain adjustments at closing; the mul tiple is based on the 2016 EBITDA of ~€385 million

High-growth and profitable business: CAGR 2014–2016 of 15%; EBITDA margin > 25%

FiguresFacts

Sales 2016 ~€1.3 billion

Sales by region

~70% North America

~15% South America

~10% Asia Pacific

~5% Europe, Middle East,

Africa

EBITDA 2016 ~€385 million

R&D pipeline and IP >250 patent families

Employees >1,800

Sites

▪ 5 chemical production and

formulation sites

▪ 10 R&D sites

▪ Regional seed production

and breeding facilities

Fully enabled seed and trait businesses

Attractive and sizeable seed portfolio for

canola/oilseed rape, soybean and cotton

in the Americas and Europe

Excellent trait research for canola, soybean

and cotton

LibertyLink® technology for herbicide

tolerance and related trademarks

Complementary crop protection business

Global glufosinate-ammonium-based

non-selective herbicide business

State-of-the-art production facilities

in the U.S., Canada and Germany

Experienced team of dedicated professionals

Strong seed and non-selective herbicide portfolioand excellent R&D platform

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Bayer’s seed and non-selective herbicide businesses– an excellent fit with BASF’s “We create chemistry” strategy

Customer focusBusinesses positioned close to customers and attuned to their needs;

earlier touchpoints with farmers and distributors via seeds in key regions

Innovation-driven Strong track record of successful innovation

Complementary

portfolio

Enhancement of BASF’s agricultural solutions portfolio with seed and

non-selective herbicide assets

Growth above

industry average

Strong top-line growth potential identified due to complementary portfolios;

potential for further growth via combination of complementary R&D pipelines

Leading seed

brands

Attractive and sizeable seed portfolio for canola/oilseed rape, soybean, cotton;

strong premium brands: InVigor®, Credenz®, FiberMax®, Stoneville®

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55

3856

8020

37

60

2006 2016 2026 estimate

~58

~93

4%

6%

~140

3%

5%

Market development and key growth drivers

Attractive and globally growing agricultural market

Fundamental growth drivers

for agricultural market intact

~10 billion people by 2050

30% more food needed by 2050

70% higher productivity needed

by 2050

Need for sustainable yield increase

drives growth

Key drivers for seed market growth

Rapid adoption of GM seeds

New breeding technologies

Crop protection and seed market billion US$; CAGR

Source: PMD Market Data 2016; BASF estimates

Seed

Crop protection

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FiguresFacts

Canola/oilseed rape, soybean and cotton in

the U.S., Canada, Brazil and Europe

Businesses positioned close to customers

and attuned to meeting local needs

Market-leading canola business in North

America with high cash conversion

Well-established license business for

LibertyLink®-technology with mid-term

patent protection

High-quality seed research for

canola/oilseed rape, cotton and soybean

Growth

2014–2016 ~14% p.a.

Sales 2016 ~€830 million

Sales 2016

by crop

~45% canola/oilseed rape

~20% soybeans

~25% cotton

~10% LibertyLink® license

Seeds – an attractive opportunity arising from current market consolidation

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Seed assets in scope – well-positioned in key row crops and with strong growth potential

Canola/oilseed rape seed business in Canada, the U.S. and Europe

Market-leading and well-recognized InVigor® brand

Innovation-led growth drivers: superior Pod Shatter Reduction

technology and clubroot resistance

Soybean seed and trait business focused on the Americas

Credenz®-branded business based on LibertyLink® trait

Growth drivers: excellent germplasm for the U.S. and South America,

tailored and enabled trait development

Cotton seed business in the Americas, Greece and Turkey

Well-recognized FiberMax® and Stoneville® brands

Growth drivers: high yield and fiber quality, excellent germplasm

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Glufosinate-ammonium – non-selective herbicideto complement BASF’s herbicide portfolio

FiguresFacts

Attractive non-selective herbicide with large

global footprint and strong track record

Growth drivers:

– resistance management

– market adoption in North America

– growth potential in Asia and

South America

Premium brands: Liberty®, Basta® and

Finale®

State-of-the-art production network

Novel mode of action in BASF’s portfolio

to contribute to resistance management

Linkage to herbicide tolerance research

Growth

2014–2016~17% p.a.

Sales 2016 ~€495 million

Sales 2016

by region

~55% North America

~10% South America

~25% Asia Pacific

~10% Europe

Sales 2016

by crop

~25% soybean

~15% canola/oilseed rape

~15% cotton

~5% corn

~40% fruits, vegetables and

others

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Significant top-line growth potential based on complementary portfolios

Mid triple-digit million euro top-line growth potential

with high profitability identified

Strong

top-line

growth

potential

in the

medium

term

Strengthened market presence in

key row crops and select countries

Opportunities from new formulations,

e.g., for herbicide resistance management

Enhanced portfolio opportunities

from entry into seeds business

Base case:

BASF

+

acquired

businesses

60

Fungicides

>€2.0 billionHerbicides

Insecticides

Herbicide Tolerance

Functional Crop Care

Fungicides

>€1.0 billionHerbicides

Insecticides

Herbicide Tolerance


>€3.0 billion

BASF’s R&D pipeline focused on innovative crop protection products and trait discovery

Trait discovery research

pipeline

Herbicide tolerance

Fungal resistance

Indication Peak sales potential

Crop protection research pipeline

Launch period: 2016–2020

Launch period: 2021–2026

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Combined R&D pipelines and access to seed marketsto drive innovation and growth

Creates better solutions for farmers

Tailored solutions for key markets to help

farmers produce more and better crops

Connects expertise to find new solutions

Earlier touchpoints with farmers and

distributors

Boosts innovation output

Robust foundation and market access

for BASF’s trait discovery research

Enhanced innovation potential for relevant

markets and key crops

Combination of two innovation-driven

businesses

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Integration concept to ensure seamless transfer of businesses and realization of top-line growth potential

Integration team set up to ensure

seamless integration

BASF to take over sales responsibility

in all major countries on day one

Glufosinate-ammonium activities to be

integrated in BASF’s existing herbicide

business

Seed businesses to be set up in a

dedicated global unit within BASF’s

agricultural solutions business

Strong cultural fit between BASF and

Bayer facilitating smooth integration

Integration concept Closing expected in Q1 2018

Subject to:

Closing of the Bayer/Monsanto

transaction

Relevant regulatory approvals

BASF Crop Protection

Businesses to be acquired

Pro-forma 2016 data of future Agricultural Solutionssegment

Fungicides

Herbicides

Insecticides


Seeds

Sales by region [€ billion] Sales by indication [€ billion]

R&D expenses [€ billion] EBITDA [€ billion]

~6.9

Europe

North America

South America, Africa, Middle East

Asia Pacific

~6.9

~1.7

Businesses to be acquired Businesses to be acquired

BASF Crop ProtectionBASF Plant

Science*

Businesses to be acquired

~0.8

* Reported in Other

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Transaction meets BASF’s acquisition criteria

generate profitable growth above the industry average

are innovation-driven

offer a special value proposition to customers

reduce earnings cyclicality

provide a return on investment above the WACC

are EPS accretive by year three at the latest


✓

✓

✓

✓

✓

✓

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A significant step to accelerate growth inBASF’s agricultural solutions business

Crop protection

Solutions beyond crop protection

Biotechnology

Seeds

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We create chemistry for a sustainable future · Global annual growth rate of ~3.6%* …more food...

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