M&A Activity Across Emerging Economies Drives Increase in Chemicals Deals
13 August 2012 Deal volume increased in the global chemicals sector during the second quarter of 2012, with half of the merger & acquisition (M&A) activity occurring in emerging economies, according to Chemical Compounds, a quarterly analysis of M&A activity in the global chemicals industry by PwC US.
“Volatile energy prices combined with an uncertain economic outlook, especially in Europe, have created a challenging deal environment across the chemicals sector,” said Anthony J. Scamuffa, U.S. Chemical leader for PwC. “Chemicals M&A activity may remain constrained in the near-term, with year-over-year deal volume decreasing more than 40% if the current pace of activity does not improve. However, on the positive side, we have seen an increase in cash balances while debt-to-equity levels have declined, boding well for deals, because it indicates that potential acquirers are becoming better capitalized.” The majority of this activity involved local market deals, particularly in China, where Chinese companies sought controlling interests in local operations.
North America drove local deal value in the first half of 2012 recording $8.8 billion as chemical companies continued to seek growth and synergies through consolidation, while Asia & Oceania drove local deal volume with 24 deals that are worth more than $50 million recording a total value of $7.4 billion, which reflects the prevalence of smaller, more fragmented markets in the region. A significant number of deals were driven by fertilizer and agricultural acquirers, but commodity chemicals and construction-related industries, such as cement and explosives, were also well-represented.
For a copy of Chemical compounds, PwC’s quarterly analysis of M&A activity in the global chemicals sector, please visit: www.pwc.com/us/chemicals
Source PricewaterhouseCoopers, Edited by FCI Staff
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