Basf Se S/Adr

Good afternoon, ladies and gentlemen. On behalf of BASF, I would like to welcome you to our conference call on the codings transaction BASF and Carlyle announced today. Besides analysts and investors, journalists have joined the call. In the first part of the Q&A, we will address questions from financial market participants. We will then move on to questions from attending media participants. During the media Q&A, we are happy to switch to German if preferred. Both audiences, please be reminded that on today's call, we will only answer questions related to the coding transactions. No other topics will be discussed. The conference call is being recorded. All participants will be in listen-only mode throughout. Today's presentation contains forward-looking statements. These statements are based on current estimates and projections of the Board of Executive Directors and currently available information. Forward-looking statements are not guarantees of the future developments and results outlined therein. These are dependent on a number of factors. They involve various risks and uncertainties, and they are based on assumptions that may not prove to be accurate. BASF does not assume any obligation to update the forward-looking statements contained in this presentation above and beyond the legal requirements. With me on the call today are CEO Markus Kamid and CFO Dirk Elverman. Now, I would like to hand over to Markus.

Thank you, Steffi, and good afternoon, everyone. Welcome to this conference call and thanks for making yourself available on such short notice. As announced an hour ago, we have reached an important milestone in focusing our portfolio and unlocking value. BSF and Carlyle reached a binding transaction agreement on BSF's coatings business. Our goal is to jointly create a leading standalone coatings company. Our coatings business has everything it takes to win. outstanding market positions, deep technical expertise, and trusted customer relationships. And of course, a world-class team, the best in the coatings industry. The business is highly focused on automotive, including the collision repair aftermarket. In surface treatment, it also serves the aerospace industry and various additional industrial applications. These are large markets with high customer loyalty. In 2024, BSF Coatings, excluding the decorative paints business we already divested, generated sales of €3.8 billion, around €1 billion in surface treatment under the Chemital brand, around €2 billion in automotive OEM coatings, and around €800 million in automotive refinished coatings with the Glaserit, RM and other leading brands. Our agreement with funds managed by Carlyle in partnership with Qatar Investment Authority is a significant step in unlocking the value of BSF standalone businesses. The enterprise value of the transaction amounts to 7.7 billion euros. Subject to customary regulatory approvals, the transaction is expected to close in the second quarter of 2026. At closing of the transaction, we will hold a 40% equity stake and will receive pre-tax cash proceeds of approximately €5.8 billion. We stay invested with a minority share because we believe in coatings' future value creation and its upside potential, building on today's success to shape an even stronger future. The agreement with Carlyle is based on the principle of partnership. Their sector experience will help position BASF Coatings for long-term success. Carlyle will leverage its strong track record and extensive experience in successful carve-outs of industrial and chemical assets. Merging the strengths of BSF Coatings with Carlyle's capabilities will open new opportunities for the team to create additional value. This will drive accelerated growth and support the team to unlock its full potential as a standalone entity. For us, as a minority shareholder, closing the transaction with Carlyle in the second quarter of 2026 will be the next big step in implementing our winning ways strategy with speed and determination. Together with the successful divestiture of BSF's decorative paints business to Sherwin-Williams, which we closed last week, BSF's entire coatings division is valued at an enterprise value of 8.7 billion euros. With the two coatings transactions, we are realizing a significant premium compared with the valuation of the division as part of BSF Group. The implied 2024 EV over EBITDA multiple before special items of approximately 13 times is evidence of that. And now, Dirk and I are glad to answer your questions.

Ladies and gentlemen, I would now like to open the call for your questions. We begin with the financial market participants. If you wish to ask a question, please press star and enter 11 on your telephone. For the best sound quality, we kindly ask you to be sure to unmute your phone and use your headset when asking your questions. Please limit your questions to only two at a time so that everybody has a chance to ask their questions. We will begin with Tom Rigglesworth, Morgan Stanley, and then move on to Christian Freitz and then Jeff Herr. So now Tom Rigglesworth, Morgan Stanley.