BASF's $1.15B Suvinil Sale Reshapes Portfolio, Eyes Share Buyback
BASF, the world's largest chemical company, has taken a significant step in its 'Winning Ways' strategy. It sold its Brazilian decorative paint business, Suvinil, to Sherwin-Williams for $1.15 billion. This sale is set to reshape the company's portfolio and focus on profitable core areas.
BASF is reviewing its animal feed enzyme business and keeping its exhaust catalyst business (ECMS). The company's upcoming Q3 results in late October will serve as a crucial test for its announced strategic shift. Investors are eagerly awaiting decisions on further strategic options in the Coatings area this quarter.
BASF plans to execute a stock buyback fund of at least four billion euros in the period 2027/28. However, the company has indicated that this buyback could start earlier, depending on transactions in the coatings business area resulting from the sales proceeds of the election results. JPMorgan has placed a 'Negative Catalyst Watch' on BASF's upcoming quarterly results.
Analysts and investors are closely watching to see if BASF's restructuring will deliver the hoped-for results or if skepticism is justified. BASF's CFO has announced that sale proceeds could accelerate the originally planned $4 billion share buyback for 2024 election results. Despite this, JPMorgan maintained its 'Underweight' rating on BASF due to its high valuation premium over European competitors. The company has reaffirmed its medium-term targets to 2028.
The sale of Suvinil to Sherwin-Williams is a significant move in BASF's strategic shift. The company's upcoming results and decisions on further strategic options will be closely watched by investors. While the CFO's statement about accelerating the share buyback is positive, JPMorgan's 'Underweight' rating and 'Negative Catalyst Watch' indicate that there are still uncertainties and challenges ahead for BASF.
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