Bayer is selling the unit, which earned an operating profit of €385 million from sales of around €1.3 billion last year, as part of its ongoing merger with Monsanto Co. (MON) , with both deals expected to close in the first quarter of next year - although the BASF sale is conditioned on the formal closing of the Monsanto deal. The official BASF purchase price is €5.9 billion.
"With this investment, we are seizing the opportunity to acquire highly attractive assets in key row crops and markets. It will be a strategic complement to BASF's well-established and successful crop protection business as well as to our own activities in biotechnology," said BASF CEO Kurt Bock. "The acquisition will further enhance our agricultural solutions offer, which is a core pillar of BASF's portfolio."
Bayer shares rose 1.02% to €117.88 each in Frankfurt, trimming their three-month gain to around 3.2%. BASF shares were marked 0.5% lower at €88.73 each, putting the stock essentially unchanged on a year-to-date basis.
Bayer said last month that its takeover of Monsanto likely won't be wrapped up until early next year and asked European regulators for an extension to the deadline on its investigation into the proposed $66 billion deal.
Bayer said it needed an extra 10 working days in order to facilitate "an appropriate evaluation given the size of the transaction." That would take the deadline to Jan. 22, 2018, if approved, and pushes the deal's completion date into early 2018.
The deal has proved something of a thorn in the side of the Monheim, Germany-based group, with the European Commission only last month launching an in-depth investigation into the proposed tie-up amid concerns it could hurt European farmers.
Bayer's shares were also hit hard earlier this year when it lowered its full-year sales and earnings estimates thanks in part to a surging euro and challenging business conditions.
Bayer said it expects full-year sales to rise to €49 billion ($58.7 billion), down 4% from its previous guidance and forecasts adjusted operating profit to grow "by a high-single-digit percentage" compared to its prior aim of a growth rate in the "low teens". The group said its planned acquisition of Monsanto remains on track and that its "making progress in our discussions with regulatory authorities"
The outlook changes followed the company's June profit warning, which it said was based on weakness in a key market in Brazil and the recent rise in the European single currency.
The Leverkusen, Germany-based group said at the time that weakness in its crop science market in Brazil would lead to a a €300 million to €400 million hit to its full-year earnings and added that "unfavorable currency developments" and a weaker-than-expected performance in its consumer healthcare division would also trim its bottom line.