The announced combination of the German oil & gas businesses of both companies disrupts BASF’s value chain in the mid- to long-term. Contrary to an asset swap, the merger will not translate immediately into new assets nor cash. Besides the announcement of the divestment, it looks to us that management has no updated strategy available nor does it communicate any to investors as the divestment ruins the current value chain and financial mechanics.
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Disruption without new strategy?
The announced combination of the German oil & gas businesses of both companies disrupts BASF’s value chain in the mid- to long-term. Contrary to an asset swap, the merger will not translate immediately into new assets nor cash. Besides the announcement of the divestment, it looks to us that management has no updated strategy available nor does it communicate any to investors as the divestment ruins the current value chain and financial mechanics.