BASF to Crank Up R&D `Two Gears' With Bayer Seeds, Next CEO Says

(Bloomberg) -- BASF SE, Europe’s largest chemical maker, plans to increase its research and development efforts as it completes its $7 billion purchase of seed and pesticide assets from Bayer AG.

About 15 percent of sales come from products that are less than 5 years old and increasing that number will be a key to BASF’s success, said Vice Chairman Martin Brudermueller, who will take over from Kurt Bock as chief executive officer May 4.

Brudermueller, 56, will keep his role as chief technology officer along with the CEO title after after he takes the helm -- an indication of how important innovation will be under his leadership. He vowed to ramp up BASF’s research focus even as competitors cut back.

“We have a very well-running innovation machine, but I would like to put it two gears more up to get even more out of it,” Brudermueller said in an interview in Freeport, Texas, where he opened an ammonia plant built with Norway’s Yara International ASA.

Gene Editing

BASF will soon enter the crop-seed business with its agreement to purchase agriculture assets from Bayer. That sale is part of Bayer’s effort to win antitrust approval for its $66 billion purchase of Monsanto Co.

Brudermueller said gene editing tools such as Crispr-Cas will help BASF develop seeds designed to work with crop chemicals, much as Monsanto’s Roundup Ready seeds are genetically engineered to survive applications of Roundup herbicide.

“With Crispr-Cas and all that, classical crop protection and seed will be more integrated in the future,” Brudermueller said. “We now have an opportunity to get a sizable, well positioned business in important crops and in important markets.”

BASF won approval from European antitrust authorities to acquire Bayer’s agriculture assets because the company has shown it can be a strong competitor, he said. The company has 10,000 people working in a global R&D program with an annual budget of 2 billion euros, he said.

Seed Operations

BASF is lined up to buy Bayer’s canola, cotton, soybean and wheat seed operations as well as research on genetically modified traits. BASF will also purchase Bayer’s glufosinate herbicide assets and three research lines for herbicides. Under changes announced Wednesday, BASF will buy rather than license Bayer’s digital-farming assets and also acquire some seed treatments.

Antitrust authorities including the U.S. Department of Justice appear to be finalizing their demands for asset sales, so reviews of the Bayer-Monsanto deal could be wrapping up, Brudermueller said.

“I think we are approaching the end of that process,” he said.

As CEO, Brudermueller said he would continue to pursue acquisitions like the Bayer deal that offer high-value assets that rely on innovation.

In December, BASF agreed to merge its Wintershall oil-and-gas business with Dea Deutsche Erdoel AG, the energy company controlled by Russian billionaire Mikhail Fridman. The merged company would be called Wintershall DEA. The venture will operate for “a few years” before executing a plan to sell shares in an initial public offering, Brudermueller said.

--With assistance from Andrew Noël

To contact the reporter on this story: Jack Kaskey in Houston at jkaskey@bloomberg.net.

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Susan Warren

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