Merrill DataSite Releases New Comments: More Activity Expected in US & Canadian Chemical Industry

Share Article -- A global study on mergers and acquisitions (M&A) in the global chemical sector has indicated that 55 percent of industry analysts expect M&A activity to increase in the sector during 2013.

Merrill DataSite

More activity expected in US & Canadian chemical industry

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A global study on mergers and acquisitions (M&A) in the global chemical sector has indicated that 55 percent of industry analysts expect M&A activity to increase in the sector during 2013.

The report - entitled Chemicals Executive M&A Report 2013 – was published by international business information specialists, AT Kearney, and took into account the opinions of executives from leading chemical industry companies and investment banks, gathered between October 2012 and January 2013.

The rise in the M&A activity in the sector is likely to be fueled by a number of primary factors, including increasingly favorable lending and financing conditions, regional expansion, low-cost feedstock throughout North America and the ongoing consolidation of the sector in Asia.

The report showed that international chemical M&A did actually experience a significant decline during 2012, in terms of deal volumes, throughout all divisions of the industry and regions. AT Kearney partner, Kish Khemani, who is also the co-leader of the Americas Chemicals Practice, said that deal value during 2012 fell steeply to $49 billion in 2012, from the record value of $151 billion reached in 2011. Khemani explained that the lack of high-value deals was a major factor behind this figure, with 2012 seeing the largest proportion of low-value chemical M&A deals for the last decade.

“While 2012 showed a sharp drop in deal value, smaller deals continued, with 65 per cent of transactions smaller than $1 billion in size, the highest portion of small deals over the 2001-2012 period,” he stated. “While corporate-level M&A is down, M&A at the business unit level within companies continues to be a focus area for growth.”

Reinforcing Khemani’s statement, the head of AT Kearney’s Chemicals, Oil & Gas Practice, Thomas Rings, added, “One cause for low deal activity in 2012 was the very high multiples from 2011. Potential acquirers were simply cautious to invest as they faced high valuation expectations from targets and high economic uncertainty.”

During 2012, the largest amount of deal activity took place in Asia, although US companies were the most attractive targets during the year, accounting for 38 per cent of the total deal value – around $19 billion.

Regarding the growth expected in 2013, up from the historic low in 2012, Andy Walberer, the other co-leader of Kearney’s Americas Chemicals Practice, said that upturns in downstream markets – specifically construction and automotive – will help to drive the increased deal activity in the US, with low prices for feedstock also playing an important role.

He explained, “Executives expect feedstock access to be pursued through both traditional M&A and through less traditional collaboration models including J&Vs, partnerships and long-term contractual arrangements by companies across the feedstock value chain.”

Around 64 per cent of the executives who responded to the survey said that the key drivers of the recovery will be the improving financing options. They also stated that alternative partnership models between companies will become a major trend during the year, as companies seek to improve their markets and technology access.

The report highlighted, however, that the positive outlook from the executives does not span the globe. Nearly 70 per cent of the respondents said that they felt that chemical M&A in Europe will still be significantly impeded by the ongoing effects of the eurozone crisis and the continuing economic uncertainty.

About Merrill DataSite

Merrill DataSite is a secure virtual data room (VDR) solution that optimises the due diligence process by providing a highly efficient and secure method for sharing key business information between multiple parties. Merrill DataSite provides unlimited access for users worldwide, as well as real-time activity reports, site-wide search at the document level, enhanced communications through the Q&A feature and superior project management service - all of which help reduce transaction time and expense. Merrill DataSite’s multilingual support staff is available from anywhere in the world, 24/7, and can have your VDR up and running with thousands of pages loaded within 24 hours or less.

With its deep roots in transaction and compliance services, Merrill Corporation has a cultural, organisation-wide discipline in the management and processing of confidential content. Merrill DataSite is the first VDR provider to understand customer and industry needs by earning an ISO/IEC 27001:2005 certificate of registration – the highest standard for information security – and is currently the world’s only VDR certified for operations in the Europe, United States and Asia.

As the leading provider of VDR solutions, Merrill DataSite has empowered more than two million unique visitors to perform electronic due diligence on thousands of transactions totalling trillions of dollars in asset value. Merrill DataSite VDR solution has become an essential tool in an efficient and legally defensible process for completing multiple types of financial transactions. Learn more by visiting today!

For more information, please contact Merrill DataSite: Tel: +44 (0)845 602 6916;
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Catherine Malone
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