Chemical Industry M&A 2019 – Spotchemy Blog

Chemical Industry M&A 2019 - Spotchemy Blog

The world is always changing, and nowhere more chemical industry, technological advances, new products and processes, new regulations and even new companies, chemical industry The future will be a very different place.

As SAP CEO Bill McDermott recently noted Sapphire Now Conference“The pace of change has never been faster – and it will never be so slow again.”

a big impact on the changing face of chemical industry Mergers and acquisitions area. Where ICI, Allied Chemical, AkzoNobel, and AGFA once stood, now Corteva, Nouryon, and Covestro stand.

effecting these changes chemical company strategyA lot of time and energy is spent by experts predicting future mergers and acquisitions. Given that the value of each year chemical industry merger It’s time and energy well spent if it’s over $200 billion.

So, what do chemical industry analysts forecast for 2019?

Deloittes 2019 Global Chemical Industry Mergers and Acquisitions Outlook, observed that there were lower trading volumes by private equity investors in 2017 as compared to the period 2015-2016. While this volume continued to decline in 2018, the value of these transactions increased significantly. noorian deal [when the Carlyle Group and GIC bought out AkzoNobel]As a result, Deloitte predicts that, “private equity will continue to play a role in the M&A market in 2019. If valuations remain high, private equity will continue to team up with other bidders, roll-ups, or make bolt-on acquisitions. ,

This is a point highlighted by the result chemical industry consultants at EY, who explain in their December 2018 reportthat “the increasing sway of private capital is creating new possibilities for deals. Activists and private equity (PE) groups have increased record amounts of dry powder, which means more competition for outright takeovers. As a result, we Expect to see more innovative financing partnerships between private investment groups and businesses in the coming year, especially around disinvestment. This will also mean more large deals. US$5 billion in 2018 and a record US$10 billion As the market corrects and PE firms look to deploy their capital, we expect this trend to continue.

This trend is based on belief in Research They conducted, finding that 74% of US executives saw an improvement in the US M&A market. Additionally, 51% of executives expect to pursue the acquisition in the next year.

This expected surge of activity is probably to offset a slightly quieter 2018, which many chemical industry sector Experience.

One such slow sector was in 2018 agricultural chemicals, where Deloitte reports that, “M&A activity in this area was largely driven by portfolio reshuffles as a result of the mega-deals of previous years. This meant smaller, more precise moves such as disinvestment of the product line.” Adding to this, “the trade dispute, particularly between the US and China, has had a negative impact” agricultural commodity prices,

This leaves Deloitte to anticipate that, “With these challenges facing the sector, M&A activity in 2019 will likely continue to target smaller, more focused portfolio rebalancing. In 2015 and 2016 we Not likely to see as many big deals.Should turn to activity in 2019 and onwards Fertilizer instead of this agricultural chemicalsWhere critical rebalancing and consolidation is approaching the final game.”

Similarly, slow activity was observed in commodity chemical segmentWhere, “measured by volume, deal activity … dropped 10 percent from 2017 to 2018, when volume reached its highest level since 2010.”

This has been attributed to the Chinese government’s new restrictions on outbound capital as well as a general slowdown in the Chinese economy.

Another area to experience a period of low deals was intermediate And special chemicals, where, “M&A deal volumes … declined for the second year in a row.” That said, “Despite the reduction in deal volume, deal value in the region has increased to levels not seen since 2014. This, including the US$12.5 billion acquisitions of Carlyle Group and GIC, has led to US$1 billion in value.” Thanks for over five transactions of AkzoNobel’s specialty chemicals businessNurian, and IFF’s acquisition of Fruitarom Industries for US$7.1 billion.

2018 was also a quiet year industrial gas fieldWith the exception of the two major deals that emerged from the Praxair/Linde merger.

In general, despite low activity in many sectors in 2018 and economic uncertainty globally (trade tensions, Brexit, slowing Chinese economy, rising interest rates), Deloitte still predicts that 2019 will be a “…stronger one.” The market will appear for M&A in global chemical industry.” Specifically, “the past reflects that in M&A”. chemical industry can flourish even in uncertain times.”

These are sentiments endorsed by NetatWork’s consultants, who in their evaluations 2019 trends in the chemical industrystates that “merger and acquisition activity in the US continues to grow rapidly. As companies spend more as they see increased liquidity levels, M&A is still the primary focus of those funds. , it is expected to continue.”

EY’s advisors agree, albeit with caution, adding that, “We expect a strong M&A environment in 2019, but are aware of rising global tensions. From the rise of tariffs and protectionism to developing international alliances, the changing geopolitical chessboard is influencing how American companies define their strategic priorities, both in the near and long term. ,

But when mergers and acquisitions have been catalysts of change for so long chemical industry, Maybe this too will change in the coming years. Digitization, globalization, and technology breakthroughs such as nanotech, are transforming the world order, and while this may result in large end-of-scale ‘economies’, resilience may instead be key.

as Strategic Consultant pwc note“The chemical industry It may be finally reaching a critical point, driven by accelerating technological advancements that are shaping customers’ purchases and needs, some chemical companies Have begun to rethink their growth strategies, finally moving away from cost-cutting and layoffs, to a more agile, consistent and aggressive business model. ,

Change everything, please, change everything.

photo Credit: Deloitte, ima, M & Critic, WBSCDspotchemy, fibermarineAnd Corporate Europe

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