BASF Puts €12 Billion on the Table as Shareholders Weigh a Historic Break-Up

BASF unveils €12B shareholder return plan, €5.8B coatings sale to Carlyle, and agricultural unit spin-off for 2027 IPO amid currency and cost headwinds.

The German chemical giant is pulling out all the stops to keep investors onside. On Thursday, BASF will convene its annual general meeting in Mannheim with a packed agenda that includes a vote on spinning off its agricultural division, the release of first-quarter earnings, and a pledge to return at least €12 billion to shareholders over the next four years through dividends and share buybacks.

The stock has already priced in some of that optimism. Shares are trading at around €54, just shy of their 52-week high, having gained roughly 21% since the start of the year. The company has been buying back its own paper aggressively, retiring more than 19 million shares since the programme began.

A €5.8 Billion Coatings Exit Fuels the Payout Machine

The financial firepower behind the generous payout plan comes from the planned sale of BASF’s coatings division to private equity firm Carlyle Group and the Qatar Investment Authority. The transaction, expected to close in the second quarter, will generate a pre-tax proceeds of nearly €6 billion. On Monday, banks began marketing around $2 billion in loans to finance the acquisition, marking a critical step forward in the deal.

The coatings sale is part of a broader portfolio sharpening exercise. BASF is using the capital freed up by the divestment to double down on core businesses and fund a sweeping overhaul of its production network.

AgChem Spin-Off Sets the Stage for a 2027 IPO

The centrepiece of Thursday’s shareholder meeting is the vote to hive off the agricultural chemicals unit into a standalone subsidiary. The move is a formal prerequisite for a potential initial public offering targeted for 2027. Analysts see the separation as strategically sound, arguing that agrochemicals and specialty chemicals follow vastly different market cycles. A split would allow each business to respond more nimbly to its own competitive dynamics.

To lead the new entity, Livio Tedeschi, the current head of the agricultural division, will join the group’s executive board on May 1. Shareholders will also receive a base dividend of €2.25 per share next week, provided the AGM approves the payout plan.

Currency Headwinds and Cost Crunch

Operationally, the picture is more challenging. A weak US dollar is expected to weigh on first-quarter earnings by as much as €200 million. High energy costs in Europe and sluggish demand from the automotive industry are adding to the pressure. BASF has guided for full-year EBITDA of between €6.2 billion and €7.0 billion, with the midpoint falling short of market expectations.

To offset the drag, management is accelerating cost cuts. The group aims to reduce annual spending by more than €2 billion, tightening the belt across the board.

Additive Prices Jump 25% as Supply Chains Fracture

In a separate but related move, BASF has imposed a sharp price increase on plastic additives, lifting them by up to 25% with immediate effect. The company blames the military conflict in the Middle East for disrupting logistics, particularly around the Strait of Hormuz. This marks the second price adjustment in the segment since March 2026.

China Cracker Comes Online

There is some good news on the operational front. BASF’s new steam cracker at its integrated Verbund site in Zhanjiang, China, has started production. The company invested a high single-digit billion-euro sum in the facility, betting on long-term earnings growth in Asia even as near-term headwinds persist.

What to Watch on Thursday

Analysts expect first-quarter revenue to fall to around €15.9 billion, with adjusted operating profit declining 17% year-on-year. The earnings release on Thursday morning will set the tone for the shareholder meeting that follows. Management must convince investors that it can balance structural transformation with operational stability—while delivering on a €12 billion payout promise that hinges on the success of the coatings sale and the AgChem spin-off.